ITEMIZED DEDUCTIONS

Cash contributions for Haiti Earthquake Relief. If you contribute cash to a qualified, IRS-approved charity providing earthquake relief in Haiti, you can elect to claim the deduction on your 2009 tax return. The cash contribution must have been made after January 11, 2010 and before March 1, 2010, to be eligible. If you do not claim the deduction on your 2009 tax return, it can be claimed on your 2010 tax return. All donations of goods, such as clothing, blankets, food, water, etc. must be claimed on your 2010 tax return.

Deduction of Sales and Excise Taxes on Purchased Vehicles. For 2009, you can deduct the state and local sales and excise taxes paid on the purchase of a motor vehicle. This deduction can also be claimed as an increase in the standard deduction allowed in 2009, if you do not itemize. The purchase must occur after February 16, 2009, and before January 1, 2010. A qualified motor vehicle is a passenger vehicle, light truck, motorcycle or a motor home. The purchaser must be the original owner of the vehicle and its gross vehicle weight must be 8,500 lbs. or less.

Other Sales Tax Deductions. Sales tax may be deducted for the purchase of motor vehicles, boats, and construction materials for building, substantial improvement, or major renovation to your home.

Tax Breaks for Charity Volunteers. When you volunteer for a charity, you can get a deduction for the out-of-pocket expenses you incur, but you cannot deduct the value of your services:

• Away from home travel costs while performing services for a charity. These costs include out-of-pocket round trip travel costs, lodging, and meals.
• The use of your personal vehicle can be deducted at 14 cents per mile or your actual costs.
• You can deduct the costs of a uniform you wear when you volunteer.
• The cost of entertaining and meals on behalf of a charity can be deducted, but the cost of your own entertainment or meal cannot be deductible.

Qualified Long-Term Care Premiums Deduction. Qualified long-term care premiums can be included in medical expenses subject to the medical expense limitations. The amounts included for long-term care premiums are limited based on your age at the end of 2009.

Mortgage Interest Deduction. Mortgage interest deduction must be secured by your personal residence or a vacation home. The mortgage interest you paid will normally be provided to you on a Form 1098. The mortgage interest is limited to a mortgage balance of $1,000,000 for acquisition indebtedness incurred after October 13, 1987. Interest on a home equity loan is limited to a mortgage balance of $100,000. This mortgage balance number may be different if you did not use the proceeds to buy, build, or improve your home. Points paid on the acquisition of a main residence are deductible in the year of payment. Points paid on the refinancing of a main residence must be amortized over the life of the mortgage.

Qualified Mortgage Insurance Premiums. The amount of qualified mortgage insurance premiums paid under a mortgage insurance contract issued after December 31, 2006, in connection with home acquisition debt, are deductible. The home acquisition debt must be secured by a first or second home.

Planning for Limitation on Itemized Deductions Due to High Income. The IRS allows you to take either the standard deduction or your actual itemized deductions. If you are a high income taxpayer, your itemized deductions may be limited. In order to maximize the value of your itemized deductions, you should take advantage of a technique known as “bunching.” Bunching allows you to adjust the timing of your expenses so they are high one year and low the next year. For example, in odd years, prepay real property taxes due in the next following year; plan charitable gifts and your miscellaneous itemized deductions for odd years.

For a complete set of instructions for itemized deductions reported on Schedule A (Form 1040), see the IRS website (www.irs.gov), or go to your local IRS office for a copy of the printed instructions.