The rules of tax deductions change yearly, but you have to learn them to play the game, and it's worth knowing the rules.
DO pay attention to donation regulations. The IRS requires receipts for all deductible donations. All charitable deductions, no matter how small, must be substantiated either by a canceled check; bank record containing the charity’s name, donation amount, and date; or a detailed receipt from the charity.
DO collect your charitable acknowledgements, receipts, and canceled checks in one place. If you make cash donations, you'll need a bank statement or a written communication from the charity noting the charity name, your donation amount, and the date. For more see IRS Publication 526, "Charitable Contributions."
DON’T claim donations of furniture, clothing, and other household goods that weren't in at least good condition when you gave them. While the IRS rule aims to weed out junk donations, you may claim a deduction of more than $500 for any single item in any condition as long as a qualified appraisal is included with their return.
DO deduct premiums for the Medicare Part D prescription drug insurance program, as well as other health-insurance premiums you pay yourself. Premiums for long-term-care insurance are deductible on a sliding scale according to age.
DO deduct gas mileage expenses when used for medical reasons. The 2011 rate was 19 cents per mile for medical travel between Jan. 1 and June 30, and 23.5 cents per mile between July 1 and Dec. 31.
DO read the list of deductible medical and dental expenses in IRS Publication 502. The following costs, for example, are deductible to the extent that they address a health issue: wigs recommended by a doctor for patients suffering hair loss due to disease, special mattresses and bed boards, back supports, elastic hosiery, childbirth classes, and remedial reading instruction for dyslexic children.
DON’T expect much. You can only deduct unreimbursed medical and dental expenses that exceed 7.5 percent of your adjusted gross income. If you are subject to the alternative minimum tax it's 10 percent. If you're self-employed, your health-insurance premiums may be 100 percent deductible, see Publication 502.
DO contribute to an IRA. If you're younger than 50 you can put in up to $5,000 for 2011 and 2012; If you are 50 or older $6,000. For 2011, if you're covered by a retirement plan at work, your deduction for contributions to a traditional IRA will be phased out if your adjusted gross income is more than $90,000 but less than $110,000 for joint filers. You have until the filing deadline to make a contribution. See IRS Publication 590, “Individual Retirement Arrangements,” for more.
DO fund a SEP IRA if you made money from self-employment last year. You're eligible even if you held another job and contributed to a 401(k) there.
For more from Consumer Reports experts on tax prep, software, deductions, refund anticipation loans, and more, go to our Consumer Reports Money section.
Previous tax related coverage:
Doing your own tax return? Check out these helpful tools
5 tips to follow before starting your taxes online
8 ways to make tax season more tolerable
How to find a good tax preparer
Avoid spending more than you need to on tax prep from a pro
Don't be tempted by tax refund anticipation loans or checks