Survival tips to whip your tax returns into shape

Are your tax returns out of shape? Don't fret. In a three-part series focusing on how to survive the 2009 tax season, we've assembled a few tips to battle that post-recession bulge. No weights or cardio work necessary.

Time for part two, so whip out that No. 2 pencil once again.

Question: What positive actions can I take now in order to turn my tax return around?

Contribute to Haiti Relief
Help a great cause this spring. Make a cash donation before March 1, 2010, and it can be claimed on your 2009 tax return. Remember to itemize on your return in order for the contributions to be deductible. Have you made a donation via text message? Print a copy of your phone bill to receive a deduction.

Purchase a home
Thinking about buying a home? If you qualify for home-buyer credit, a home purchased before June 30, 2010 (the home contract must be in order by April 30) can be claimed on your 2009 tax return for up to $8000 in credit for first time home buyers or $6500 for long-time residents.

Give money to an HSA
Give money to a Health Savings Account if you were covered by a high deductible health care plan in 2009. This contribution will provide an above-the-line deduction. Limits are $3,000 for individuals, and $5,950 for families. There is also a $1000 catch for those age 55 and over.

Give money to an IRA
Contribute to an individual retirement account before April 15, 2010 for an above-the-line deduction. Limits are $5,000 for individuals with a $1,000 catch for those age 50 and over. Income levels over $65,000 for individuals and over $105,000 for families are not entitled to a deduction.

Click here for part one and here for part three of the three-part series.

Also, Consumer United has teamed up with TurboTax to make times a little easier. File your simple return for FREE with TurboTax Federal Free Edition. Click here to start saving.

What to do now to save money at tax time

At a time when many Americans continue to keep a close eye on their budgets, one place to look for some extra savings may be your tax return.

Though returns are not due until April, as the year nears its end, it makes sense to analyze where credits and deductions could come from. Mortgages and higher education are two categories that can offer much-needed breaks for many families.

In many cases, the interest on a mortgage can be taken as a tax deduction. The interest can sometimes come from more than one property or mortgage, but in general the amount mortgaged cannot be more than $1 million. On the other hand, if the interest is particularly low, it also may not make sense to itemize the deduction. A free tax planning program offered by Turbo Tax may help some homeowners make decisions about what to deduct.

The interest on student loan debt can also be deducted based on a $2,500 break offered to individuals earning less than $55,000. Individuals earning up to $70,000 are qualified for a gradually reduced deduction. The deduction for student loans can be taken each year that you are making payments on the loan as long as you continue to earn less than $70,000.

In addition, if you make contributions to a traditional IRA, you can deduct that contribution if you meet income requirements. The money remains untaxed until it is withdrawn. This can be a particularly important incentive to add to put some money away at a time when saving seems difficult.

Click here for Turbo Tax’s Web site to learn more about their free tax preparation program.

--Bridget O'Sullivan