Even without major tax legislation — thanks, political gridlock — taxpayers need to be aware of even slight adjustments that could benefit them as they prepare their returns.
Here are tips for lessening your tax bite and a suggestion for putting your refund to good use.
First-time homebuyer credit This popular $8,000 credit expired for most people in 2010.
But it was extended into last year for members of the military, foreign service and intelligence community who had been working outside the country. They can receive the credit if they purchased a house in the U.S. by April 30, or if they entered into a contract by that time and concluded the sale by June 30.
There is more than one version of the credit. The one in 2008 was worth up to $7,500 and must be repaid over 15 years. This is the second year that filers are repaying the credit through their tax return.
Jackie Perlman, a tax analyst with the Tax Institute at H&R Block, says many taxpayers aren't sure how much they must repay. The Internal Revenue Service, she says, now offers a handy online tool at irs.gov that allows you to plug in your Social Security number and find out the amount owed.
Education break Taxpayers within certain income limits can deduct up to $4,000 in college tuition and fees paid last year. But the IRS recently clarified the rules, making some classes taken by high school students eligible for the tax break, too, Perlman says.
Parents with a high school student who took college classes and paid tuition to the college can also qualify, Perlman says. The deduction is retroactive.
You can amend old returns going back to tax year 2008 to claim it, Perlman says. After April 17 — this year's tax deadline — you will be able to amend tax returns going back only to 2009, she says.
Retirement You have until the tax deadline to contribute to a traditional individual retirement account and get a deduction on your 2011 return. The maximum contribution is $5,000 for the year, or $6,000 for those 50 and older.
You can qualify for a deductible IRA no matter how much you earn if you aren't covered by a retirement plan at work.
If you do have such a plan, you can deduct all or some of your contributions, provided you meet income limits, which have gone up. A full or partial deduction is available to singles earning less than $66,000 and joint filers with income below $110,000.
Even if you don't qualify for a deductible IRA, you can still boost your retirement savings by contributing to a Roth IRA by the tax deadline. It won't lower your tax bill. But your contribution is made with money that's already been taxed, and earnings will be tax-free in retirement.
The income limits to qualify have gone up. A full or partial contribution can be made if income is under $122,000 if single or below $179,000 for joint filers.
And if your goal is to save for retirement — which it likely should be — you can salt away more dollars this year in a 401(k). The maximum contribution has gone up to $17,000 this year. Workers age 50 and older can throw in an additional $5,500.
Double-check deductions Income limits to qualify for tax breaks often go up with inflation. And if your income remained flat or dropped after a spouse lost a job, you now qualify for certain deductions.