5 tax breaks you can still grab

Mortgage insurance

If you borrow more than 80% of the value of your home, your lender will normally require you to purchase private mortgage insurance, or PMI. Before 2007, the cost of the insurance was deductible only over the life of the loan and only for investment properties.

But for 2007 through 2010, you can deduct PMI premiums as additional interest on Schedule A, line 13. The insurance contract must have been issued after 2006, the insurance must be paid in connection with home acquisition debt, and the deduction will disappear as your income increases. The deduction is phased out as your adjusted gross income increases between $100,000 and $110,000 ($50,000 and $55,000 if filing single).

Medical expenses

Expenses for medical care are allowed if you itemize your deductions. But you can deduct only the amount that exceeds 7.5% of your adjusted gross income.

Still, as formidable a hurdle as that threshold is, don't overlook this area.

Medical care means any amounts paid for the diagnosis, care, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body. That's IRS talk meaning, "If it affects a part of your body, it's medical care." So, eyeglasses are part of your medical care because they affect your vision.

Here are some medical deductions that may have been missed:

• Electrolysis performed even by an unlicensed technician.

• Wigs for those who have lost their hair.

• A reclining chair recommended by a doctor for a patient with a cardiac condition.

• A swimming pool recommended by a doctor to alleviate a physical condition.

• Elastic stockings prescribed for an elderly patient.

• Expenses of travel to Alcoholics Anonymous meetings.

• Removal of lead-based paint from homes.

• Home improvements made to accommodate someone with a physical disability.

• Transportation for a parent who must accompany a child needing medical care.

• Premiums for long-term care (limited based upon your age).

• The cost of an overseas trip for medical or dental treatment.

Investment expenses

Sure, you deducted your investment magazines and the fees you paid your broker to manage your account. You even deducted investment miles and phone calls.

But did you take the easy way out and let your broker subtract your annual IRA or retirement fee directly from your retirement account? If so, you missed another deduction, and you reduced the amount of your retirement account that would otherwise have grown tax-deferred.

Write a separate check for that annual fee. Deduct it as an investment expense and allow your retirement funds to appreciate even more. You get a double benefit here: both a current deduction and a bigger investment account growing tax deferred.

Roth IRA contributions

This one isn't really a deduction. But it's an awesome tax-advantaged investment that you should've made.

How'd you like to make a contribution to your Roth individual account even if you don't qualify?

If you made more than $116,000 in 2008 ($169,000 on a joint return), you don't qualify for a Roth IRA contribution. For 2009, the limits rise to $120,000 for individuals and $176,000 for couples.

But we don't care about no stinkin' rules!

Continued: How to contribute to your Roth

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