
The clock is ticking toward the April 15 tax filing deadline. In the rush to get your return ready, it's easy to overlook some lucrative deductions. This year, there's more confusion than usual, thanks to the last-minute fiscal cliff deal that extended some tax breaks but not others.
The weak economy and high unemployment rate have made some credits and deductions relevant to people who may not have qualified for them in the past.
Here are some tips from tax pros to get all the breaks you deserve:
Know the true value of your charitable donations. Some people may be guilty of inflating their charitable contributions on their tax returns, but TurboTax Vice President and CPA Bob Meighan suspects far more undervalue what they give to charity. Some particularly easy to overlook contributions include mileage, out-of-pocket expenses and the value of used goods.
You can't deduct the value of your time, but if you itemize you can take a tax break for mileage incurred driving to and from your volunteer commitments. (If you don't itemize, you can't write off any charitable contributions.) The rate isn't exceptionally generous — just 14 cents per mile — and you'll need to keep a record of how many miles you drive, the day you drove them and the charitable purpose.
Out-of-pocket expenses incurred while volunteering are another potentially deductible expense.
"If you're a Boy or Girl Scout leader, mail birthday or get-well cards for a charitable organization or prepare food for your local soup kitchen, keep track of the cost of the adult uniforms, books, postage and even the ingredients you purchased for the food so that you might deduct the amount on your taxes," said enrolled agent Cynthia M. Jeanguenat of Virginia Beach, Va.

Liz Weston
Clothing, furniture, toys and other used goods donated to good causes could reap you a far more substantial deduction. The IRS allows you to deduct the fair market value of such goods, and those values tend to be significantly more than you could sell the items for in a yard sale.
TurboTax's free sister site, ItsDeductible, provides values for thousands of items based on the prices they fetch on eBay. Those nearly-new hardcover books you're practically giving away in your garage sale could have sold for $7 on the auction site. Since your tax break is equal to your tax bracket, that $7 would equal $1.75 off your taxes if you're in the 25% bracket.
Document each donation with an itemized list of items and their values. Take a snapshot with your camera or phone as further proof. And get a receipt from the charity.
You'll find more details in IRS Publication 526, Charitable Contributions.
Take credit for retirement savings. Low- and moderate-income taxpayers get an extra tax break if they save for retirement. Not only are their contributions to retirement accounts typically untaxed, but they also can get a credit that can reduce their tax bill by up to $1,000. (Credits are usually better deals than deductions, since they offset your tax bill dollar for dollar.)
Contribution to individual retirement accounts (IRAs), Roth IRAs and workplace retirement plans such as 401k's and 403b's all qualify. The credit, which equals up to half of the first $2,000 you contribute, starts to phase out as income rises. But single people with adjusted gross income up to $28,250 and marrieds with incomes up to $56,500 qualify for at least some credit. The income limit is $42,375 for heads of household.
You can learn more in the retirement tax credit section of the IRS site and by reading IRS Publication 4703.
Offset medical expenses. Your health costs have to be fairly hefty to qualify for this deduction. Only medical expenses in excess of 7.5% of your adjusted gross income qualify for the write-off in 2012. The minimum rises to 10% for tax year 2013 for taxpayers under 65.
But the weak economy makes it more likely that people have qualified for this deduction.
"People overlook this because they're not sure they qualify," Meighan said. "With the economy being so tight and unemployment so high, their incomes may have been significantly reduced over the years, so it's easier for many people [to take the deduction]."
Out-of-pocket costs for doctor visits, hospital stays and prescription drugs all count toward the total, as do weight-loss and smoking-cessation programs if your doctor prescribes them.
Your mileage to and from treatment can be a write-off, too, at 23 cents a mile. So can other transportation costs such as tolls and parking. You can find more information IRS Publication 502.
What doesn't qualify? Over-the-counter medications, including nicotine patches and gum, trips or programs to improve your general health and most cosmetic surgery.
Write off your move. Job-hunting expenses can be deductible, but they have to be substantial (more than 2% of your AGI), and you have to itemize. If you actually find a job and have to move, however, you are far more likely to qualify for a tax break.
The moving expense break "is an 'above the line' deduction. You don't have to itemize," Meighan said. "It's an adjustment to your income."
To qualify, your new workplace typically has to be at least 50 miles from your previous home, and you have to work full time for at least 39 weeks during the 12 months following your arrival at your new job location. The time test can be waived in case of death, disability, layoffs and other factors. Also, if you're a member of the armed forces and you were ordered to a permanent change of station, you don't have meet the distance or time requirements. For more information, check out IRS Publication 521, Moving Expenses.
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Recover from disaster. Many people are underinsured, and disasters as widespread as Superstorm Sandy or as local as a house fire or burglary can leave victims facing huge bills. Uncle Sam feels your pain and offers the chance to write off such casualty and theft losses. If you had insurance, you must have filed a claim, and you can't deduct any expenses that were reimbursed.
If your loss was from a federally declared disaster, you get an additional potential benefit. You're allowed to amend the previous year's tax return to include your casualty loss deduction. That can get you a refund in the same year you experienced the disaster. Otherwise, you can claim it the next year. For more information, read Publication 547.
Get credit for working. This is a refundable credit, which means you can get money back even if you don't owe any federal taxes. The credit was designed to provide an incentive to work for low- and moderate-income families. The maximum credit ranges from $475 for low-income people with no kids to $5,891 for families with three or more children.
The big problem with the Earned Income Tax Credit is that it can be mind-numbingly complex to figure out if you qualify.
"I'm just shocked that people don't know they can take it," said Jennifer MacMillan, an enrolled agent in Santa Barbara, Calif. "But people take a look at that (IRS) worksheet and say, 'nope.' "
To get the credit, your earned income and your AGI in 2012 have to be less than certain amounts:
- If you have three or more qualifying children, your earned income and your AGI must be less than $45,060 for singles or $50,270 married filing jointly
- If you have two or more qualifying children, the limits are $41,952 for singles or $47,162 married filing jointly
- With one qualifying child, the limits are $36,920 or $42,130 married filing jointly
- No kids? Your AGI and earned income must be under $13,980 single, $19,190 married filing jointly
The IRS has an "EITC Assistant" that can help you determine if you qualify. Tax preparation software or a tax pro can assist you with the calculations, as well.
Get help with education costs. There is both a credit and a deduction that can help offset the costs of higher education, but you can only use one, so choose wisely.
First, check out the American Opportunity Tax Credit, which can reduce your taxes by as much as $2,500 per undergraduate. Unlike other education credits, this one applies to all qualifying educational expenses, including tuition, books, materials and supplies, Jeanguenat says.
"Although this credit is not new or unknown, I think it is one of the best credits out there right now, and was just extended through 2017," Jeanguenat said. "Up to 40% of the credit is refundable, meaning that it will apply first to any tax, and then any credit remaining will be refunded. (That's) a pretty good return on your investment."
The American Opportunity credit applies to all four years of undergraduate college education. The credit is gradually reduced (or "phased out") for income from $80,000 to $90,000 (or $160,000 to $180,000 for joint filers).
Another tax break to explore is the Lifetime Learning Credit, which offers up to $2,000 per tax return and includes graduate as well as undergraduate education. The student needn't be full time.
"You can take a golf class at a community college and get a credit for 20% of the cost," MacMillan noted.
If you don't qualify for either, you may still be able to deduct up to $4,000 if your AGI isn't more than $80,000 ($160,000 for a joint return). The education credit is an above-the-line deduction, so you don't have to itemize to get it.
Publication 970, Tax Benefits for Education, has all the details.
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Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.


