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Make sure you maximize those itemized deductions


Income tax itemizers may not be getting the maximum from deduction opportunities.

"You do one tax return a year, and the law is so complicated that you just miss things," said Paul Manghera, senior financial counselor for Ernst & Young.

To claim these, you must file the full 1040 and Schedule A forms. Your deductions must total more than the standard deduction to be worthwhile.

For the 2003 tax year, the standard deduction is $4,750 if you are single or married but filing a separate return; $9,500 if married and filing jointly; and $7,000 if filing as head of household.

Some things that are easy to miss:

If you found yourself holding stock that became worthless in 2003, you can treat it as a capital loss. This applies, for example, to investors in Kmart Corp., who watched their stock value disappear in a 2003 bankruptcy plan. Use Schedule D and report the loss on line 1 or 8.

Independent entrepreneurs can deduct 50 percent of their self-employment tax as long as they are an incorporated business. File a Schedule SE to get this deduction.

If you paid points on a mortgage to buy your primary home, you can deduct that entire cost. If you paid points associated with refinancing, you'll have to do some math to amortize the dollar cost of the points over the life of the loan. For example, if you paid $1,500 in points to refinance to a 15-year loan, you can deduct $100 a year for the next 15 years.

Don't forget to factor in real estate taxes on line 6 of Schedule A.

Next week: Adjustments to income.

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