updated 3/5/2004 12:13:27 PM ET 2004-03-05T17:13:27

Every year, countless tax returns are filed by taxpayers who neglect to claim deductions they are actually entitled to take.

"People overpay their taxes by an average of $400 each year due to missed tax breaks and savings incentives," says Denise Sposato, public relations manager for the U.S. Tax division at H&R Block

Sure there are the deductions you'd think most people would be aware of, such as mortgage interest and charitable donations. But, in fact, nearly one million people fail to itemize mortgage interest, resulting in an overpayment of $473 million, according to a 2002 GAO Report.

"They either don't realize these deductions exist or that they apply to them," says Martin Nissenbaum, national director of personal income tax planning at Ernst & Young. "Many people simply don't realize they are entitled to certain deductions."

And there are many more deductions people are not taking advantage of, such as the money they have spent to improve their home if it was for medical purposes. Even the losses incurred while gambling at the blackjack table or betting on the Super Bowl are legitimate deductions.

Many people are tempted to settle for the standard deductions rather than itemize and figure out a whole series of individual items. This is a mistake for many taxpayers. More than two million taxpayers use the standard deduction when they really should itemize, H&R Block's Sposato estimates.

Taxpayers who should definitely consider itemizing are homeowners and/or those who work or live in a high-tax area.

Keep in mind that to qualify for some of these potential deductions, your expenses have to rise above a certain level, usually a percentage of your adjusted gross income. Sometimes, there is a limit on overall itemized deductions.

There are many different resources that are worth checking out that can help you figure out what deductions you are entitled to. Guides like "The Ernst & Young Tax Guide 2004" cover all the new tax-law changes and how they might affect you as well as many tax-saving tips.

Another good resource is Yahoo!'s Yahoo! Finance Tax Center, which provides all the tools and resources you need to complete and file your 2003 tax returns via the Internet. New this year are special segments devoted specifically to tax education and IRA education, as well as a new interface.

H&R Block Online offers a wide variety of products and services, including a new library of tax tips, a new report tailored to the client's tax and financial situation and a new, comprehensive do-it-yourself service that provides users with the option of a professionally signed return. The new Signature Edition online product provides audit assistance and the option of a professional review and signature, making the taxpayer eligible for the same guarantees as H&R Block office clients.

So it just may be worth the time and effort to investigate what you are allowed to deduct--especially if it saves you hundreds or even thousands of dollars.

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