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A Half-Dozen Tips for 11th-Hour Filers

For more information, check IRS Publication 590, "Individual Retirement Arrangements," available at www.irs.gov.

• Second, there are lots of education benefits out there, and you may qualify.

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There are two credits for higher education, the Hope and Lifetime learning credits, either of which could save you $1,000 or more if you're paying tuition. Remember, a credit reduces your taxes dollar for dollar. Both are complicated to compute and both phase out at incomes between $42,000 and $52,000 for a single person and $85,000 and $105,000 for a couple. However, if you're over the limits and your child has income, it may pay to take your child off your return as a dependent and let her claim one of the credits on her return.

There are also deductions for college tuition costs and for interest on student loans, so if you have a child in college or are repaying a college loan, or have questions about the credits, check out IRS Publication 970, "Tax Benefits for Education."

• Third, do you have interest to deduct? There are six different categories of interest, with different rules, and deductions may have to be taken on Schedule A, C or E, depending.

Mortgage interest, the most common, is deductible on purchase debt of up to $1 million, and on home equity not used to buy, build or improve your house up to $100,000 of debt. And home equity debt may not be deductible for the alternative minimum tax.

And remember that if you refinanced, "points" must be written off over the life of the new loan. But if you re-refinanced, any remaining points from the first refi can be deducted immediately.

But there are other rules for other kinds of interest. For example, investment interest -- interest on money you borrow to buy stocks or bonds, for example -- is deductible only up to your investment income. If you have more interest than income, you can carry the extra interest over to a later year.

But if you have capital gains or "qualified" dividends (spelled out on Form 1099), you can elect to have them treated as investment income and deduct investment interest against them. Normally, capital gains and qualified dividends get special low rates, but if you have a lot of investment interest you can't otherwise deduct, the election could save you a bundle.

Check IRS Publication 550, "Investment Income and Expenses."


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