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Using taxes to reduce taxes
Homeowners get another way to reduce what they pay Uncle Sam: claiming real estate taxes as a tax deduction.
If part of your mortgage payment each month includes an escrow amount that's used to pay annual real estate taxes, then the Form 1098 you get from your lender also will tell you this amount.
Then there are any state and local income taxes you paid. Check your W-2 for this information, and be sure to deduct those, too.
Don't own a house? Don't despair. There's still a tax deduction opportunity for you if your state or county charges a personal property tax. Most often, this tax is on autos, so if you pay, make sure the collecting tax agency sends you a statement showing how much so you can put it on your Schedule A.