1. IRA Deduction.
Take the maximum IRA contribution available to both the taxpayer and the Spouse. Note a non-working spouse can also contribute $4,000 subject to taxpayer having earned taxable income equal to the amount of IRA contributions. You can also contribute as much as $5,000 to the account of a nonworking spouse over age 50.

2. Mortgage Interest & Property taxes deduction.
If you own a home, claim the itemization option on Schedule A, as you are entitled to deduct property taxes, mortgage interest paid, along with prepaid points (if you paid these upfront, otherwise you have to amortize these costs over life of loan) and state income taxes.

3. Investment related expenses
The following are deductible expense in this category;
If you incur fees for safe deposit box to hold investments (e g Stock Certificates);
Investment advisory fees
Margin account interest expense
Penalty on early withdrawal of on Savings
Worthless security/stock

4. Charitable Contributions.
Make sure that you save all your cancelled checks for charitable donations made in 2006. For non-cash donations, make sure the donated clothes are in good conditions; have them valued if it appears that the value exceeds $500.00.
If you have traveled in connection with charity work then the mileage is deductible at a rate of 14 cents per mile. You must have kept records of charitable purpose, dates, places, and miles. However, the value of your services is not deductible.

5. Medical Expenses
Medical Expenses have to exceed 7 ½ % of your Adjusted gross income in order to be deductible on the federal tax return. Nevertheless, for certain states like New Jersey, there are no restrictions to exceeding certain AGI amounts, so I would recommend that you accumulate these expenses and provide to your accountant for inclusion on the federal tax return. Remember, there are a lot of expenses that you can claim under this category, medical, dental, vision, medical insurance premium, long term care and cost of prescription drugs. Learn to save your receipts.

6. Taxes and Preparation Fees
In addition to the tax preparation fees, you are entitled to deduct Audit fees incurred in connection to an IRS audit. Also, deductible are IRA trustees administrative fees that are billed separately. Finally, don’t forget to deduct foreign taxes paid, these are reported usually on your broker statement, and can be seen also on 1099-Div statements as well.

7. Credit for Federal Telephone Excise Tax
If taxpayers were billed after February 28, 2003 and before August 1, 2006, for federal telephone excise tax on long distance or so called bundled service, you may be entitled to request a credit or refund of the tax paid. The bundled service is referred to as when your local and long distance service was provided under a plan that does not separately state the charge for local service.

8. Standard Mileage Rate
For 2006, the standard mileage rate for cost of operating a vehicle used in trade or business has been increased to 44.5 cents per mile for all business miles driven. For 2007, this amount has been further increased to 48.5 cents per mile. Note however, the IRS requires the taxpayers to maintain a daily vehicle log report to substantiate business mileage use.

9. Educator Expenses
Per IRS rules, for tax year 2006, Teachers and other educators (including classroom aides, counselors, and principals) can deduct as much as $250 that they spent to purchase classroom supplies last year. The IRS rules state that the deduction for educator expenses can be claimed on Form 1040, line 23, "Archer MSA Deduction." Enter "E" on the dotted line to the left of that line entry if claiming educator expenses, or "B" if claiming both an Archer MSA deduction and the deduction for educator expenses on Form 1040. If entering "B," taxpayers must attach a breakdown showing the amounts claimed for each deduction.

10. Student Loan Interest and Tuition Fees
The most commonly overlooked expenses are tuition payments, interest paid on a student loans, and educational credits that is, hope credit or lifetime learning credit.

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