A last minute tax law signed in late December revived three deductions that can help reduce taxes on your 2006 return.
Tuition and fees.
This above-the-line break is available if you paid educational expenses such as tuition, books, and activity fees to a college or vocational school in 2006 for yourself, your spouse, or a dependent.
You don't have to itemize to claim the deduction, and you can include amounts paid with money you borrowed. The deduction limit is $4,000 or $2,000, depending on your income.
Educator expenses.
Did you buy classroom supplies for your kindergarten through twelfth grade students during 2006? You can reduce your income even without itemizing by deducting up to $250 of these unreimbursed costs. Supplies include books, computers, and supplementary materials. As in prior years, be sure to keep your receipts.
Sales taxes.
You can choose to deduct actual state and local sales taxes paid during 2006 as calculated from your records, or a standard figure provided by the IRS. Sales taxes you paid on big-ticket purchases, such as vehicles, can be added to the standard amount.
To benefit, you have to itemize and forego the state and local income tax deduction.
Additional rules may apply to your situation. For more information on how to maximize these deductions and others, please give us a call.
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