First of all, there are many available deductions and credits that are just overlooked by taxpayers. These include credits for expenses you pay for child care and dependents while you work or look for work, and the earned income credit for taxpayers that work and earn less than certain amounts set by the IRS.

A couple of ways to learn about these and other deductions and credits other than learning about all of them yourself is to have a third party prepare your taxes so you have a baseline of what's available to you. For something free, you can look into services provided in your community. Type "free file" in the IRS search box at irs.gov, and you'll get a list of many programs that provide free federal tax preparation services. Often, these services are for the benefit of a certain portion of the taxpaying public. Another option is to download free federal tax preparation software. There are quite a few reputable vendors that offer this.

If you take the standard deduction, use that free software to compare taking the standard deduction vs. itemizing deductions. Itemizing starts to make sense when you have a home mortgage, and the bulk of your monthly payments are going to payoff interest.

Your employer may offer several tax advantaged programs such as 401k retirement plans and FSAs (flexible spending accounts). These are programs where you tell your employer how much of your pay to withhold. Employers then remit those funds on your behalf to your retirement account or FSA. The benefit is that the amounts withheld are not required to have taxes withheld on them. No federal income tax, Social Security, or Medicare.

For tax purposes, individuals are usually what is called "cash basis". That means if you can and want to pay the 2^nd installment of your property taxes within the tax year, you can deduct the property taxes on Schedule A where you itemize deductions. The same goes for contributing to IRAs or Roth IRAs if you qualify. Of course there are always exceptions to the rule, and IRAs and Roth IRAs' exception is that you have until April 15 following the end of the current tax year to contribute to those retirement accounts and still be able to enjoy the tax benefit. The tax benefit for IRAs will be realized in the tax year as an adjustment to income, but the Roth IRAs tax benefit will be realized when you withdraw funds.

Even infrequent events may be overlooked for their tax benefit. If you've moved for a job, those moving expenses may be deductible if you meet certain distance and time tests, and also dollar hurdles. If you buy a house, you can deduct any points you've paid. If you've refinanced, you may deduct the pro-rated amount of the points over the life of the new loan. The recent Stimulus Package includes a new, additional credit for purchasing a home, too.

Speaking of owning a house, interest on the first $100,000 of a home equity loan secured by your first or second residence may be deductible.

You've probably heard about taking losses on stocks or mutual funds to save on taxes. Remember that if you didn't have any gains during the tax year, you're limited to the amount of losses you can take to offset income. However, if you did realize gains on stocks or mutual funds, consider selling any stocks or mutual funds you own that are in a loss position by year-end to offset the taxes you would pay on the gains.

Interest you or your parents paid for your student loan may be deductible as an adjustment to income so you don't even need to itemize deductions.

There are also educational credits available for yourself or a dependent if you meet certain qualifications.

Finally, don't forget about non-cash deductions such as charitable contributions. Keep receipts when you donate used clothes, old bicycles or cars, and you may be able to deduct a market value for those items.

Keep in mind the balance between what the deduction costs and how much it'll save you in taxes because it's not necessarily a dollar for dollar reduction. Credits reduce your taxes dollar for dollar.