There are new guidelines for claiming child-related benefits and new tax breaks for hurricane victims and charitable donors. The alternative minimum tax (AMT) is on track to snare almost 4 million taxpayers this year, and millions more will fail to claim credits for their higher education expenses.
Miss out on these changes, and you could be joining the millions of Americans overpaying their taxes by $1 billion each year by missing credits and deductions.
To help taxpayers understand these issues, H&R Block is kicking off the tax season by mobilizing its network of more than 70,000 tax professionals. H&R Block tax professionals will be hitting the streets across America, delivering free advice on tax topics with the most widespread impact.
"Our tax experts have identified five major tax areas that deserve special attention by taxpayers this year," said Tim Gokey, president of the U.S. Tax Division of H&R Block.
Here are the top five things you need to know about taxes this year:
1. Claiming child-related benefits: A new "uniform definition of a child" changes how taxpayers can claim child dependents. Anyone with a child may gain or lose important tax benefits due to the changes.
2. Hurricane relief and charitable giving: New tax breaks benefit those impacted by hurricanes along the Gulf Coast and individuals who contributed to the relief efforts.
3. Alternative minimum tax: The number of taxpayers paying the AMT will soar from nearly 4 million in 2005 to almost 20 million in 2006 if the law remains unchanged.
4. Earned income tax credit: It makes the list every year, but 25 percent of eligible families fail to claim this credit, which is worth an average of $1,760.
5. Education-related benefits: Nearly 27 percent of eligible taxpayers fail to claim education tax benefits. Evaluating which education tax break provides the greatest savings - the Lifetime Learning Credit, the Hope Credit and Tuition and Fees Deduction - can be difficult because of odd phaseouts and varying eligibility guidelines.
