Take That: Best Tax Breaks to Grab Now

Published February 10, 2012

| Reuters

Until the current tax system is completely reformed, we Americans have the right to life, liberty, the pursuit of happiness and our cherished tax deductions.

It's not cheating to take every writeoff that is legally available to you; it's just good common sense. If you skip one, you're just leaving money on the table.

So here's a list of some of the most popular and overlooked tax deductions for tax season 2012. Take them while you can.

If, for example, you actively participate in your 401(k) plan, you can still take a full deduction for putting money into an IRA if you make less than $56,000 (or $90,000 if you're filing jointly). You have until April 17 to make a 2011 contribution of up to $5,000, or $6,000 if you are 50 or older.

To do that, use a system. You can enter your gifts into TurboTax's ItsDeductible (http://turbotax.intuit.com/personal-taxes/itsdeductible/) even if you don't use Turbotax. The Salvation Army also offers a guide http://www.salvationarmysouth.org/valueguide.htm.

Remember that you need a receipt from the charity for each donation you deduct, even if it was just the $5 bill you threw into a bucket over the holidays.

After that is the lifetime learning credit. It's $2,000 per taxpayer, not per student, and can be used for graduate school or continuing education costs.

Finally, there's a $4,000 deduction for tuition and fees, even for taxpayers who don't itemize their deductions. But you can't take that in the same year you take the credits.

You can take these education tax breaks even if you're pulling money out of a 529 plan for college, but you can't double count the money. That means you can't take a credit or deduction for the same money you take out of a tax-deferred plan. If you pull $10,000 out of the 529 and spend $2,500 out of pocket, for example, you can claim the credit for the $2,500.

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http://www.foxbusiness.com/markets/2012/02/08/take-that-best-tax-breaks-to-grab-now/