To itemize or not to itemize? Here's the answer:

Taxpayers have a choice of taking the standard deduction or itemizing their deductions. If itemizing certain expenses results in a greater refund, then file Schedule A and claim the greater deduction on line 40 of Form 1040.

First you have to determine your standard deduction based on your filing status. For 2010, they are:

• Single $5,700
• Married Filing Jointly $11,400
• Head of Household $8,400
• Married Filing Separately $5,700
• Qualifying Widow(er) $11,400

Four days left to make your IRA Charitable Rollover

When President Obama made official on December 17, 2010, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, he reinstated the Individual Retirement Account (IRA) Charitable Rollover through 2011. This allows individuals aged 70 ½ and over to donate funds up to $100,000 from their IRAs to public charities without being mandated to report it as taxable income.

The new law has a special rule for 2010, taxpayers can make retroactive IRA charitable donations in January 2011 and have them count toward 2010. Only four days remaining to make this donation.

To qualify:

• You must be at least 70 ½ years old.
• You must be subject to Required Minimum Distribution from your IRA.
• Money is transferred directly from your traditional IRA to approved charities. Rollovers from 403(b) plans, 401(k) plans, pension plans, and other retirement plans do not qualify.
• Annual donations cannot exceed more than $100,000 per individual. Amounts more than $100,000 will be added to taxable income.
• The rollover for 2010 must be completed before January 31, 2011. The rollover for 2011 must be completed between January 1, 2011 and December 31, 2011.

Who could benefit?

Get organized

The sooner you get organized, the sooner you may receive your refund. Take time today to gather all of your receipts, credit card and bank statements and anything you have spent money out of pocket. Put these documents in a folder or box so you can keep track for tax purposes. You can organize your files in the following categories:

• Income – pay stubs, bank and investment statements
• Medical – expenses and out of pocket premiums
• Donations – cash and non-cash
• Real Estate – Mortgage statements, property tax payments, settlement statement if you're a first-time home buyer in 2010 and have not yet claimed the credit.
  
• Child Care – receipts, provider's address and EIN
• Tax Correspondences – Ohio and Local Estimated statements
• Student Loans – tracks loan interest
• Payments – receipts for tax deductions
• Mileage Log - needed if you use your personal vehicle for work

During January you will receive the following documents in the mail and you'll be able to file these into their respective categories:

• W-2's
• 1099's
• Mortgage interest statements
• Bank interest statements
• Real estate tax statements
• Investment statements
• Receipts for charitable donations

Taking time now will have it easier to prepare this year's return. Here are the IRS record keeping guidelines.

Taxpayers have to wait to receive their income tax refund

Taxpayers who claim certain deductions for will have to wait until middle to late February to file their 2010 returns. The Internal Revenue Service will need extra time to put processing systems in place as a result of the changes in the tax law from the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 which was made official on December 17, 2010.

The biggest on the list is the Schedule A which is used for taxpayers who wish to itemize their deductions which covers an estimated one-third of all filers. Typically, these taxpayers do not file their returns early in the season.

Taxpayers who wish use the following tax benefits are affected:

• home-mortgage interest, property taxes, excess medical expenses, gifts to charity and including state and local taxes – Schedule A
• college tuition and fees – Form 8917
• Educator Expense Deduction claimed on Form 1040, Line 23, and Form 1040A, Line 16

In addition to the above deductions, the tax bill also extended into 2010 an Alternative minimum tax (AMT) patch and the IRA direct charitable donation rollover (extended through December 31, 2011).

The delay will affect both paper filers and electronic filers so the IRS urges taxpayers to use e-file to minimize confusion over the recent tax changes and ensure accurate tax returns. All tax returns claiming these credits or deductions should not be filed until the IRS is ready to start processing these returns in mid - to late February.

Feb. 28 is Last Day for Special 2009 Haiti Relief

Only a few days left to make Haiti relief donations and claim them on your 2009 income tax return.

Under a special provision due to the recent earthquake, contributions to Haiti relief between Jan. 12 and midnight Sunday, Feb. 28 can be claimed on either the 2009 or 2010 tax return. Contributions made after Feb. 28 but before the end of the year can only be claimed on the 2010 return.

• Contributions can be in the form of text message, check, credit card or debit card and must be made to qualified charities. Gifts made to individual victims and foreign organizations are not deductible. Non-cash donations are not eligible for this special provision.
• Donations charged to a credit card before the end of February count for 2009 - even if the credit card bill isn’t paid until after Feb. 28.
• Checks count for 2009 as long as they are mailed by the end of this month and clear your financial institution shortly thereafter.

There is a record keeping requirement for all donations. Keep a bank record, cancelled check, receipt from the charity – needs to list the name of the recipient organization, the date and the amount of the contribution. For cash contributions of $250 or more, donors must obtain a written acknowledgement from the charity.

Taxpayers who wish take advantage of this special provision must itemize their deductions by claiming the amount donated on line 15 of the Schedule A. Those who claim the standard deduction are not eligible.

For more information, refer to IRS Publication 526 for more information.

Increase your Itemize Deductions

Pay bills now and increase your tax refund.

Itemized Deductions include the following:

• Uninsured medical and dental expenses during the year,
• Interest and taxes paid on your home,
• Unreimbursed employee business expenses or other miscellaneous deductions,
• Uninsured casualty or theft losses, and
  
• Contributions to qualified charities.

If you know already you will be completing a Schedule A Itemized Deductions for 2009, here are some tax tips to increase next year's refund:

State and local income taxes
Mail your January estimated payment in December and you can claim a deduction for the payment this year, not in 2010. This applies to taxpayers who make estimated State and/or local tax payments directly. Note: you'll realize no benefit if you're subject to AMT.

Real Estate Taxes
Soon you will receive your 2010 Cuyahoga County property tax bill in December 2009 (you usually receive it around Christmas). Paying this bill in December will allow you to claim an additional deduction in 2009.

Mortgage Interest
Make your January 2010 home-mortgage payment before the end of this year and you will have an additional interest that will appear on your Form 1098. In the 25% bracket for 2010 on a $1,000 interest payment, that saves you an immediate $250 on April 15, 2011. By doing that each year, you have created an interest-free loan of that $250 every year until the loan is paid off.

Go to Church regularly?
Consider putting your typical January 2010 contribution in the collection plate in December so you can claim the deduction this year. You are going to church on Christmas Day aren't you?

Medical Expenses
If you're close to exceeding the threshold of 7.5% of adjusted gross income for medical expenses, you may want to get caught up and paid in full before the end of 2009.

As with most tax breaks, you have to spend money in order to earned the benefit. The above may seem like a lot of money to spend before the end of the year. Think about this: these are examples of bills and expenses that you will have to pay anyway. Why not receive the tax benefit now instead of waiting to file your tax return in 2011.