Did you know that there are almost 50% of the people who file taxes pay more taxes than they need to pay? Hard to believe, isn't it? Dot Accountants is not suggesting that you do your own tax filing but just know enough about your own personal situation to save money.

Tax deductions are one of the key ways you reduce your tax liability. There are 100s of tax deductions but they do not apply to every person. Tax deductions give a tax break to certain people in certain circumstances.

Example, you may deduct home mortgage interest or medical and dental expenses if certain conditions apply.

The first thing to do to find out about tax deductions is to read some of the tax forms, believe it or not. It does sound strange but reading the tax questions on the forms helps you find out what type of things can be deducted.

Start with IRS Form 1040. Every person who files taxes has to file this form. Look at the section called "Adjusted Gross Income". In this section there are 10 -12 different deductions. Some may apply to you.

Page 2 of this same form is the section called "Tax and Credits". This is where you list any credits that may apply to you. This is not a deduction from income but a credit against taxes that you owe. (Even better than a deduction.)

Example, if you had spent $1,000 on education you may be able to put in on several different lines on the tax form. On line 34 of the 1040 form you could put education tuition and fees as a deduction. In this case your taxable income would be $1,000 less. (This would lower your taxes by $150 - $350 depending on your tax bracket.)

Or you may be able to put that $1,000 on line 49 as a tax credit. In this case you would owe $1,000 less taxes. Of course, this is the better choice. You may not know this if you had not read the tax form.

The next form to go for tax deductions is Schedule A, itemized deductions. Read all the lines on this form and you can determine what may apply to you. After looking at these questions you will be able to determine if you want to take the "Standard Deductions" instead. The standard deduction is a flat amount that applies to everyone but you may have more deductions and can use the schedule A, itemized deductions form.

The next form to look at is the Schedule C form. Even if you do not really run a business but you have additional income that you have to report, you could use this form.

Read section 2 (Expenses) of this form. See if you have any of these items that may apply in connection to earning your additional income. Suppose you made $2,000 additional income. If you did not put the amount on Schedule C than you would have to pay taxes on the whole $2,000. However, if you had paid expenses of $1,000 then you list the expenses on schedule C and you would pay less in taxes.

If you have a small business, even a home-based business, there are hundreds of deductions available.

You can also look at the IRS web site and type in "deductions" into the search box and find out more information.

You can have a tax preparer prepare your taxes or use a computerized tax program. No matter how you file your taxes you need to know more information about your own case.