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

Can I claim my child as a dependent?

To claim someone as a dependent that person must either be your qualifying child or qualifying relative.

To be a qualifying child:

1. The child must be related to you.
2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, (c) any age permanently and totally disabled.
   
   A child is permanently and totally disabled if both of the following apply.
   
   • He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
   • A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death
3. Child must live with you more than six months.
   

Do I Have To File a Tax Return?

Yes, you must file a federal income tax return if you are a U.S. citizen. However, there are certain instances where a taxpayer does not have to file a return based on three factors:

• Gross Income
• Filing Status
• Age

You must file a return if your gross income is at least the amount shown for your age and filing status.

Common tax return mistakes

10 things to watch for as you prepare your tax return.

1. Incorrect Social Security numbers or misspelled names
2. Using incorrect forms and schedules
3. Wrong filing status
4. Claiming ineligible dependents
5. Misapplied Earned Income Credit and Child Tax Credit
6. Lack of receipts
7. Failure to report all income
8. Not checking for Alternative Minimum Tax
9. Not signing the return – note the taxpayer and the spouse must sign and date the tax return
10. Not attaching Form W-2 and other forms that indicate taxes withheld during the year

Bonus items:

1. Applying for a Refund Anticipation Loan (RAL) without W-2 Earned Income
2. Omitting the Social Security Number or EIN of your caregiver for the Child and Dependent Care Credit
3. Mailing the tax return to the wrong address. Here is where to mail tax forms.
4. Making your check payable to the IRS. The correct payee on checks and money orders should be the United States Treasury.
5. Misreading the income tax tables
6. Failure to make a copy of the return for the taxpayer's records
7. Computation errors
8. Incorrect bank account numbers for Direct Deposit
9. Insufficient postage on envelopes. Better yet, use registered mail so there is a record that IRS received your tax return especially if you are paying a balance due.

Here are some other suggestions to avoid tax problems.

Is social security taxable income?

A portion of your social security benefits may be taxable if your total income plus one-half of your net social security benefits exceeds a base amount for your filing status. Net benefits are reported on box 5 of Form SSA-1099. If the only source of income is Social Security, then none of the benefits are taxable and the taxpayer does not have to file a federal income tax return.

The base amount is

• $25,000 if your filing status is single, head of household, or qualifying widower
• $25,000 if MFS if you lived apart from your spouse the entire year
• $32,000 if MFJ
• $0 if MFS if you lived with your spouse at any time during the year *
  

Use the Social Security Benefits Worksheet to determine the taxable amount. Total social security benefits are reported on Form 1040 line 20a while the taxable amount is reported on line 20b.