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The Most-Overlooked Tax Deductions

Here are the top 19 breaks that you shouldn't pass up.

By Kevin McCormally 

December 2010

Every year, the IRS dutifully reports the most common blunders that taxpayers make on their returns. And every year, at or near the top of the “oops” list is forgetting to enter their Social Security number at the top of the tax form -- or making a mistake when entering those nine digits.

No doubt about it: The opportunity to make mistakes is almost unlimited, and missed deductions can be the most costly. About 46 million of us itemize on our 1040s -- claiming nearly $1 trillion worth of deductions. That’s right: $1,000,000,000,000, a number rarely spoken out loud until Congress started debating economic-stimulus plans to combat the Great Recession.

No doubt about it: The opportunity to make mistakes is almost unlimited, and missed deductions can be the most costly. About 48 million of us itemize on our 1040s -- claiming more than $1 trillion worth of deductions. That’s right: $1,000,000,000,000, a number rarely spoken out loud until Congress started debating economic-stimulus plans to combat the Great Recession.

Another 92 million taxpayers claim about $700 billion worth using standard deductions—and some of you who take the easy way out probably shortchange yourselves. (If you turned 65 in 2010, remember that you now deserve a bigger standard deduction than the younger folks.)

Yes, friends, tax time is a dangerous time. It’s all too easy to miss a trick and pay too much. Years ago, the fellow who ran the IRS at the time told Kiplinger's Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the money-savers listed below:

1. State sales taxes. Although all taxpayers have a shot at this write-off, which has recently been extended through 2011, it...