In 1758, Benjamin Franklin said, "It would be a hard government that should tax its people one-tenth part of their income."

Imagine what Citizen Ben would think if he were transported to the 20th century, during which the top marginal rate exceeded 50 percent much of the time, peaking at 94 percent in 1944-45 for taxpayers with incomes of more than $200,000. Today, income tax rates range from a relatively benign 10 percent to 35 percent -- still more than Ben would have liked.

The tax code is not only designed to generate revenues for government programs. Uncle Sam provides some pretty nice tax breaks that provide Americans incentives to get a college education, buy a home and save for retirement.

These breaks typically come in the form of tax deductions or tax credits. A tax credit is usually a dollar-for-dollar sum that can be directly deducted from taxes owed. A tax deduction is a sum that reduces your taxable income.

Identifying the breaks that you qualify for is the first step toward lowering your overall tax burden, which helps build your bottom line.

1. Tax deductions for homeownership

Mortgage points. According to the Office of the Comptroller of the Currency, there are more than 34.7 million mortgage loans worth more than $6.1 trillion as of June 2008.

That means a lot of people are eligible to reduce their overall tax bill if they know where to look.

The Internal Revenue Service generally allows mortgage points, also known as discount points, to be deducted from your tax return. Mortgage points are upfront fees paid to a lender for the loan.

One mortgage point equals 1 percent of the loan amount. Points are usually paid at closing and generally result in a lower interest rate on the loan.

IRS rules allow homeowners to deduct points over the term of the loan or all at once in the year they were paid. To deduct points all at once, you must meet certain IRS eligibility tests. In general, the home must be your main residence. In addition, the points you paid must not be considered exorbitant, must be computed as a percentage of the mortgage and must be clearly identified as points on your settlement sheet.

"The key thing to remember about this is all of these things need to be itemized," says Kay Bell, a tax expert who writes Bankrate's "Eye on the IRS" tax blog. "You can't use Form 1040-A or 1040-EZ."

Points that don't meet IRS eligibility tests or points paid on loans secured by a second home can be deducted only over the life of the loan. In general, the loan period must not be longer than 30 years and the number of points must be six or less.