There are many different ways to file for taxes, it is very tedious work. There is software you can purpose and do them online. You can also go to an accountant. You can gather all the documents and prepare them by hand yourself. No matter what method you use, you still need to collect all the information to save money. It's great way to take advantage of any credits owed to you or deduction you might be eligible for.

In 2005, the IRS offered up the information that $842 billion was the claimed value from personal exemptions. I don't doubt for a minute that everyone tries to take advantage of every opportunity to save their hard earned dollars, but there here are some tax deductions that are easily overlooked though.

Standard or Itemized Deductions?

Among the choices that might have the greatest effect on your tax return, in terms of the bottom line, is whether to opt for standard or itemized deductions as you file. For an unmarried filer, the standard deduction amount is $5,350, which is doubled for married taxpayers filing jointly. If your filing status is head of household, your deduction amount is $7,850.

According to the GAO, a Congressional investigative group, in 2002 only a third of the nation's taxpayers chose to itemize. This resulted in a loss of approximately $438 per taxpayer. In aggregate, not itemizing represented a $945 billion overpayment to the government.

The fact that most of us don't keep detailed records about our financial life through out the year can leave us with a rather intimidating job to do at tax time. To itemize your deductions on your taxes, you must collect information about your real estate taxes paid, your charitable giving, medical expenses, dental expenses, business travel expenses, educational expenses and many other pieces of information that may seem trivial over the course of a long year. But suddenly, at tax time, this information becomes all too important. Even if you hire someone to file your taxes, most of this work still rests firmly on your shoulders. While your accountant is responsible for organizing the data you provide to them, you are still responsible for collecting all the data they need. Many Americans choose to curtail our workload by simply choosing to take the standard deduction on our taxes.

Deciding whether to itemize is a relatively simple decision for homeowners to make. You sum the real estate taxes, interest on mortgage, state and local income taxes, then compare those sums with the standard deduction. People over 65 have an extra $1,300 single and $1,050 married-filing-jointly that can be taken in the standard deduction.

You don't have to own a home to save money by itemizing on your taxes. All renters can itemize such as fees for advice on investment, making large purchases like a car or appliances. There are so many items can be deducted on your tax return. Collecting this information may pay for itself on your yearly tax returns. You can use sales tax in place of state income tax if you don't pay income tax in your state.