At tax time, we could all use some good and free advice, and there's none better than this: Take tax credits and deductions you're entitled to take, and avoid mistakes.

It sounds simple, but taxpayers each year miss credits or deductions - or take them when they're not supposed to - and make other errors that cost them money.

Credits & Deductions

Credits and deductions are your best friends at tax time. They lower your taxes.

Credits lower the amount of taxes you owe, dollar by dollar. Deductions lower the amount of your taxable income - the lower the income, the lower the tax.

Either way, the key is to take them when you're entitled to. It very well could mean the difference between owing taxes and getting a refund.

Don't Miss These

The tax code is loaded with credits and deductions, so take the time to go through your return carefully. But here are some that taxpayers often overlook, and some new ones for 2010:

Mileage deduction. For 2010, you can deduct:

  • 50 cents per mile for the business use of your personal car
  • 16.5 cents per mile for moving expenses or medical expenses - driving to and from your doctor, for example is deductible
  • 14 cents per mile for medical expenses

New for 2010, if you're self-employed, you may be able to deduct what you paid for medical insurance for you, your spouse, and effective March 30, 2010, your children who were under age 27 at the end of 2010.

Also new for 2010, the adoption credit credit is refundable. That means you may claim it even if you owe no tax or wouldn't otherwise get a refund. Also, the credit is $13,170, up from $12,150 in 2009.

Did you pay someone to care for a child, spouse, or dependent in 2010 so that you - or your spouse - could work or look for a job? If so, don't forget about the Child and Dependent Care Credit. It can be up to 35 percent of your expenses, with caps of $3,000 for one dependent $6,000 for two or more.

Were you one of the millions of Americans looking for a new job in 2010? If so, you may be able to deduct your job search expenses, such as travel and resume expenses and employment agency fees. To qualify:

  • You had to be looking for a job in your present occupation, or the same occupation as before you were laid off or lost your job
  • You began looking for the new job reasonably soon after you lost your old job

Did you make your home more energy efficient in 2010? If so, you may get a credit. It's 30 percent of what you spent for high-efficiency heating and air conditioning systems and water heaters, as well as energy-efficient windows, skylights and doors, and other items. The credit is capped at $1,500.

Have kids in college? Don't forget to take the deduction for qualifying expenses, like tuition, books and supplies. You can deduct up to $4,000. Also, check to see if you're eligible for the American Opportunity and Lifetime Learning credits. Keep in mind, the Hope Credit is not available for 2010.

Mistakes and Errors

Make sure you're entitled to take a credit or deduction before you actually claim it. For example:

  • Taxpayers claiming the Earned Income Tax Credit (EITC) when they're not entitled to the credit is one of the most common errors found by the IRS
  • The US Treasury Department found that thousands of taxpayers improperly claimed the Plug-in Electric Vehicle and Alternative Motor Vehicle (AMV) tax credits. Also, keep in mind that parts of the AMV credit aren't available for your 2011 return
  • Make sure you have receipts or canceled checks for charitable donations, whether you gave cash or clothing or household items. Also, make sure you follow the IRS rules when it comes to placing values on clothing, household goods and other noncash donations
  • All unemployment compensation paid to taxpayers in 2010 is taxable. The 2009 tax law that allowed you to exclude $2,400 of benefits from your income expired. This doesn't have anything to do with credits or deductions, but it's an error you need to avoid

Everyone wants to pay less in taxes and increase refunds. It can be done, too. Just be careful and follow the rules. If you're uncertain about whether you're entitled to a credit or deduction - or uncertain about anything else on your tax return - it's best to talk to a professional tax preparer or a tax lawyer before you send in your return.

Questions for Your Attorney

  • I forgot to take a deduction for my child's college expenses last year. Can I claim last year's amount on this year's taxes?
  • Can I take the Plug-in Electric Vehicle or Alternative Motor Vehicle credit if I bought a qualifying car and then sold it, all in 2010?
  • Can I deduct room and board I pay for my child's college eduction?