Little things can mean a lot for savvy tax filers

updated 2:42 p.m. ET Feb. 6, 2008

WASHINGTON - For 2007 income taxes, it's the little things that count. Small deductions here, a credit there, a bit of help for homeowners caught in the mortgage crisis — all add up to tax savings for savvy filers.

But a big thing _ Congress' last-minute fix of the alternative minimum tax — delayed filing for several million early birds who usually submit returns months ahead of the April 15 deadline.

Affected were taxpayers claiming any of five credits related to the AMT. This year, they couldn't file before February. More than 13 million taxpayers claim those credits, the Internal Revenue Service said, but only about 3 million to 4 million typically file before Feb. 11, the agency's target date for processing those forms.

For 125 million other taxpayers it's business as usual, the IRS says. And for everyone, including those affected by the five AMT-related forms, tax returns are still due April 15. Tax owed must be paid by that date, even if you file for the automatic six-month extension.

Filing electronically and having your refund electronically deposited into a bank account will get it to you weeks earlier than choosing to receive it by government check.

"We strongly encourage taxpayers to file electronically, particularly those affected by late tax law changes," said Linda Stiff, acting IRS commissioner. "Filing electronically makes things easier by reducing errors and speeding up refunds."

Taxpayers using home tax preparation software should check the companies' Web sites often for updates. Those still grappling with paper forms can print updated forms from the IRS Web site or order them from the IRS by calling 1-800-829-3676.

Forms also are available at post offices, banks, public libraries and other outlets, though they might not be up to date. But then neither is the tax packet that last year's paper filers received by mail from the IRS in January, because it doesn't include those five AMT-related forms.

When the dust settles, you'll find there's little that's new this filing season, other than the usual inflation-related adjustments. But even small items can add up.

"Make sure that you've got the bases covered. Make sure you know all of the deductions you're entitled to, the credits you can claim," said Maggie Doedtman, client advice manager for H&R Block, the tax preparation giant.

Leading the list of new items for 2007 are tax breaks for homeowners facing foreclosure or struggling with house payments that include mortgage insurance premiums.

Mortgage insurance is required by government and private lenders on home purchases in which the buyer pays less than 20 percent as a down payment. For 2007, taxpayers can deduct mortgage insurance premiums on home acquisition debt that was new or refinanced in 2007. If you simply continued paying premiums on a mortgage that predated 2007, you can't deduct those.

Like many deductions, this one phases out as income rises. Only taxpayers with adjusted gross incomes of $100,000 or less take the full deduction.

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