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Break on through: Cut your tax bill with these deductions

Death and taxes might be certain, but the latter changes each year.

Even without major tax legislation — thanks, political gridlock — taxpayers need to be aware of even slight adjustments that could benefit them as they prepare their returns.

This season, filers will come across new tax forms, a twist on an education tax break that can benefit parents of high school students, and changes in mileage reimbursements.

Here are tips for lessening your tax bite.

EDUCATION BREAK: Taxpayers within certain income limits can deduct up to $4,000 in college tuition and fees paid last year. But the IRS recently clarified the rules, making some classes taken by high school students eligible for the tax break, too, Perlman said.

Parents with a high school student who took college classes and paid tuition to the college can also qualify, Perlman said. The deduction is retroactive.

You can amend old returns going back to tax year 2008 to claim it, Perlman said. After April 17 — this year's tax deadline — you will be able to amend tax returns going back only to 2009, she says.

RETIREMENT: You have until the tax deadline to contribute to a traditional individual retirement account and get a deduction on your 2011 return. The maximum contribution is $5,000 for the year, or $6,000 for those 50 and older.

You can qualify for a deductible IRA no matter how much you earn if you aren't covered by a retirement plan at work.

If you do have such a plan, you can deduct all or some of your contributions, provided you meet income limits, which have gone up. A full or partial deduction is available to singles earning less than $66,000 and joint filers with income below $110,000.

Even if you don't qualify for a deductible IRA, you can still boost your retirement savings by contributing to a Roth IRA by the tax deadline. It won't lower your tax bill. But your contribution is made with money that's already been taxed, and earnings will be tax-free in retirement.

The income limits to qualify have gone up. A full or partial contribution can be made if income is under $122,000 if single or below $179,000 for joint filers.

And if your goal is to save for retirement — which it likely should be — you can salt away more dollars this year in a 401(k). The maximum contribution has gone up to $17,000 this year. Workers age 50 and older can throw in an additional $5,500.

DOUBLE-CHECK DEDUCTIONS: Income limits to qualify for tax breaks often go up with inflation. And if your income remained flat or dropped after a spouse lost a job, you now qualify for certain deductions.

One to look out for: the federal earned income tax credit for low- to moderate-income workers.

The IRS reports that one out of five eligible workers don't claim it. They're leaving lots of money on the table.

The credit is tied to income and family size. The maximum credit is $5,751 for taxpayers with three or more children and income under $43,998 if single and below $49,078 if married filing jointly.

A credit reduces your tax bill dollar for dollar. But this one is refundable, which means that if you don't owe any taxes, you get the credit as a refund.

MILEAGE REIMBURSEMENTS: If you deduct mileage for business purposes, be aware that the rate changed in mid-2011.

For the first half, the rate was 51 cents per mile, rising to 551/2; cents for the rest of the year.

If you used your vehicle for medical purposes, such as visits to the doctor, the rate was 19 cents for the first six months, and 231/2; cents thereafter.

"I have heard from return preparers that when this happens, people claim all their mileage was in the last six months of the year," said Mark Luscombe, principal analyst with CCH, a provider of tax information.

But tax experts warn you must keep an accurate, detailed log of your mileage if you don't want to run afoul of the IRS.

NEW FORMS: Since last year, the IRS has been phasing in a requirement that investment firms report the cost basis — the purchase price of securities — once they're sold. Apparently, some investors haven't been accurately reporting this, costing Uncle Sam billions of dollars in lost revenue.

As part of this effort, investors who sold securities will have to fill out a new form, 8949. Investors won't have to report much more information to the IRS than before, but it will be spread across more forms, Luscombe said. It's possible, he says, that investors might have to fill out as many as three 8949s.

"That seems to be confusing people a lot," Perlman said. "Hopefully, you're doing this with software."

Eileen Ambrose is a personal finance columnist at the Baltimore Sun.