2. Writing off private mortgage insurance
When a homebuyer does not make at least a 20 percent down payment, lenders usually require private mortgage insurance, or PMI. For some loans taken out in 2007, PMI payments are now deductible.

"I don't think there's any question that it's a good idea," says Don Hodson, an enrolled agent with the Financial Enhancement Group in Anderson, Ind. However, Hodson has some concerns about the implementation of this tax break.

"Many people really don't know what PMI stands for or even what it is," he says. "You're actually being asked to purchase an insurance contract to guarantee the balance due. That required cost is actually a cost associated with the purchase and now it can be deducted just like home mortgage interest."

Kathy Harrison-Suits, an enrolled agent with Summit Capital Advisers in Tacoma, Wa., shares Hodson's PMI deduction concerns.

"This is a real area of concern for people," says Harrison-Suits. "Most people don't know what PMI is and my fear is that they're going to assume, 'I pay insurance on my house for my mortgage' and think they are eligible."

In fact, Harrison-Suits has already had some clients call about this tax break, thinking that their homeowner hazard insurance premiums qualify.

And even taxpayers who understand PMI and make such payments might not be able to use this tax break.

"Treasury gives with the right hand and takes away with left," says Hodson, pointing to the deduction's many restrictions.

It is phased out for taxpayers with adjusted gross incomes exceeding $100,000 ($50,000, if married filing separately). "It's reduced by 10 percent of every $1,000 over that $100,000 base. So if you have $110,000 income, you can't claim it," says Hodson.

The deduction also applies only to PMI policies issued in 2007, 2008, 2009 or 2010. Originally, the tax break was only for 2007 PMI payments, but it was expanded for the three additional years by the Mortgage Debt Forgiveness Act.

And the mortgage for which the insurance payments are made must be to buy or build a first or second home. If the PMI is in connection with a home equity loan, the funds must be use improve the property for the premiums to be deducted.

3. AMT relief, delay
As 2007 was winding down, lawmakers reached an agreement for a temporary fix, or patch, to the alternative minimum tax. This costly parallel tax system, commonly referred to as the AMT, snares more filers each year, primarily because it's not indexed for inflation.

Another major problem posed by the AMT: Many common tax breaks used every year by individual taxpayers to lower their IRS bills are not allowed under the alternative system. For example, under the AMT, you cannot deduct state and local taxes.

For the last several years, Congress has increased the amount of income that's excluded from the AMT, thereby saving millions of taxpayers from having to make the tax's additional calculations.

The 2007 patch raised the exemptions to:

• $66,250 for married, joint return filers. • $44,350 for single or head of household taxpayers. • $33,125 for married couples who file separate returns.