By Steve Thompson, Contributing writer
With every penny counting these days, it's no surprise that everybody is searching for every single tax deduction and write-off they can find.
After all, saving money on taxes in the spring can free up a significant amount of cash that you could be doing other things with the rest of the year.
Itemizing might save you money over taking the standard deductions, but you need to remember that not all deductions and write-offs are applicable to every situation.
Some are limited by scope or other criteria, so don't forget to read the small print. Working with an experienced accountant or checking your facts with the IRS will also save you headaches in the future.
Keep in mind that peppering your taxes with lots of these write-offs might arouse suspicion with the IRS, which doesn't tend to be too tolerant of mistakes.
No. 5: Bad debt
According to the IRS, bad debt can be converted into deductions and write-offs in certain business and nonbusiness cases.
Bad debt occurs when you extend credit to someone, offer a payment plan, but never receive the money you are owed.
The most important thing with this deduction is that you must have significant proof of the debt and establish that you have taken reasonable steps to collect.
Make sure you've saved the invoice or invoices that you submitted to the other individual or entity.
Be careful though; you must also show that a transaction could not be considered a gift. Therefore loans to relatives where there was an understanding it might not be repaid, or any loans to minor children to pay for basic needs, cannot be considered deductible bad debts.
No. 4: Eco-friendly home upgrades
If you've used Energy Star products to make some home improvements, you might qualify for a tax credit.
According to EnergyStar.gov, for the 2011 tax year, you can receive a tax credit worth either 10 percent of the cost up to $500 or a specific amount from $50 to $300 for certain products that were installed in an existing home you claim as your primary residence. That includes certain Energy Star-rated insulation, roofs, nonsolar water heaters, windows and doors, and biomass stoves installed by Dec. 31, 2011.
That tax credit is no longer available for upgrades made this year.
The government is also offering tax credits for qualifying geothermal heat pumps, small wind turbines, solar energy systems and fuel cells installed through 2016.
Be sure to save all receipts and the manufacturer's certification statement for your records. You can claim the credit using IRS Form 5695 and include the credit on line 52 of the 1040 form.
No. 3: Relocating
There are no deductions or tax write-offs if you've simply picked up and moved cross-country, but you can get some tax relief if you've moved more than 50 miles for a new job.
According to the IRS, you may be able to deduct your reasonable moving expenses but not any expenses for meals.
Besides the 50-mile "distance test," the IRS also requires a "time test." You must work full-time for at least 39 weeks during the first 12 months immediately following your move. The IRS offers exceptions to the time test in case of death, disability and involuntary separation, among other things.