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Bankrate's 2009 Tax Guide
Tips & tools
A tax tip a day plus an array of tax tools, terms and training will help you through filing and beyond.
 
Daily tax tip
TAX TIP No. 34
No need to itemize above-the-line deductions
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National Guard and reserve members who traveled more than 100 miles during the tax year in connection with their service can deduct those costs here. So can performing artists who meet IRS guidelines, as can state or local government officials who were paid, in whole or in part, a fee to do their jobs. If you are in one of these three fields, tally your out-of-pocket costs on line 24. The Form 2106 instruction book has more details on claiming this tax break.

3. Health savings account deduction. A health savings account, or HSA, is a medical coverage plan that works much like an IRA. Eligible participants put money into an HSA where it grows tax free and withdrawals can be made to pay medical, dental and vision-care costs not covered under a corresponding high-deductible health care policy.

HSA holders can deduct, within IRS limits, their annual contributions; for 2008 tax purposes, that includes money contributed last year, as well as deposits to the account as late as this April 15. The maximum possible above-the-line HSA deduction on 2008 returns is $2,900 ($5,800 if the account is for family coverage; account holders age 55 or older in 2008 can add another $900). Fill out Form 8889 to determine the exact amount you can claim on line 25.

4. Moving expenses. Moving expenses. If you relocated for job reasons, some of your expenses can be deducted on line 26. You will, however, also have to fill out Form 3903.

5. Self-employment tax. If you're self-employed, you have to pay Social Security and Medicare taxes -- both the amount collected from you as an employee and you as an employer. But you get to deduct half of those payments on line 27.

6. Self-employed retirement plans. If you have a self-employment pension plan, such as a Keogh or a SEP-IRA, deduct any contribution amounts on line 28.

7. Self-employed health insurance. As an entrepreneur, you now can deduct 100 percent of health insurance premiums you paid for yourself, your spouse and dependents. Don't forget to count what you paid toward long-term care policies. You get a partial break here, too. Enter the amount on line 29.

8. Penalty on early withdrawal of savings. On line 30, the IRS gives you a break when someone else slaps your hand. If you cashed in a certificate of deposit and paid an early withdrawal penalty, you'll find the amount on the 1099-INT or 1099-OID that the account manager has sent you. The IRS lets you subtract that charge from your income.

-- Updated: Feb. 23, 2009
 
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