Find Money in Your Tax Files
The paperwork blizzard has begun and your mailbox is likely filling up with the ingredients for your 2011 tax return: W-2 forms from your employer, and 1099s from your bank and investment accounts. But you'll also want to check your files for other important papers that can help you take advantage of frequently overlooked tax deductions:
Charitable contributions. If you itemize, look for a record of checks or credit card payments you've made to charities, and don't forget to review records of anything you bought to help a charity, such as ingredients for a soup kitchen, stamps for a charity's mailing, or mileage for driving you do for a charity (14 cents per mile in 2011). And look at your pay stub for any charitable contributions you made through automatic deductions at work.
Tuition bills for continuing education classes. Even if you aren't a full-time student, you may qualify for the Lifetime Learning Credit of up to $2,000 per family per year (20 percent of up to $10,000 for tuition, fees and books). To qualify, your adjusted gross income must be less than $60,000 if single or $120,000 if married filing jointly. And students in their first four years of post-secondary education can take the American Opportunity Credit of up to $2,500, if their modified adjusted gross income is less than $90,000 if single or $180,000 if married filing jointly.
Child-care expenses. If you pay for child-care for a child under age 13 while you work or look for work, then you could qualify for the child-care tax credit, worth 20 percent to 35 percent of up to $3,000 for the cost of care for one dependent or $6,000 for two or more (both spouses need to work, or one must be a full-time student). Keep records and the tax ID number for care providers. Daycare or preschool, as well as day camp, before-care and after-care, can count toward the credit.
Reinvested dividends. If you sell shares of stock or mutual funds in a taxable account, it can pay to dig up records of dividends you reinvested through the years. You already paid taxes on these dividends in the year when they were paid by the company, so you can add them to your tax basis (usually your purchase price plus brokerage fees). That reduces the tax bill when you sell. Also, don't forget about any capital losses carried over from past years. Capital losses from sales of money-losing stocks or mutual funds in a taxable account first offset capital gains, then up to $3,000 in losses can be subtracted from your ordinary income (such as your salary) for the year. Any additional losses can be carried over to future years.

