The number of undeliverable refunds each year is a relatively small portion of all refunds returned to taxpayers, as of mid-November 2007, the IRS had processed nearly 105 million refunds, totaling about $240 billion, either by mail or direct deposit. In fact, undeliverable refunds account for less than one-tenth of one percent of all refunds, or about one in a thousand.

A refund check is normally returned as undeliverable when a taxpayer moves without updating his or her address with either the U.S. Postal Service or the IRS. If you moved after filing last year’s return and never received your refund you can still get it back by calling the IRS at 1-800-829-1954 or by completing a change of address Form 8822 with the IRS. Your tax preparer can help you get any prior year refunds due to you.

Can’t pay?
On the other side of the tax coin, sometimes people can’t pay their taxes in full or one time, which results in penalties and interest. If you cannot pay your taxes, you may request a payment agreement.

Individual who owe $25,000 or less in combines taxes, penalties and interest can use the on-line payment application process to request a payment agreement.

The application will allow your tax preparer to qualify, apply for an installment agreement and receive immediate notification of approval.

Mortgage insurance
Starting in 2007, you may be able to treat mortgage insurance premiums paid in connection with the purchase of your home as home mortgage interest, this making it deductible. The insurance contract must have been issued after 2006, and you must have paid the premiums before 2008 for coverage during 2007.

Qualified mortgage insurance is provided by private mortgage insurance companies, the Department of Veterans Affairs, the Federal Housing Administration or the Rural Housing Service.

If you pay prepay premiums for mortgage insurance that is allocatable to periods after the close of the year, such premiums are treated as paid in the period to which they are allocated.

The deduction is phased out for taxpayers with incomes between $100,000 and $109,000 ($50,000 and $54,500 if you are married filing separately).

Children tax credit is good for families

If you have children and meet a few criteria you may be able to reduce your federal income tax by up to $1,000 for each child. To qualify your child must be:

• » Under the age of 17 at the end of the year.
  » Be your son, daughter, adopted child, step child or eligible foster child, sibling or step sibling or a descendent of any of these individuals
  » Be a U.S. citizen or resident alien
  » You provided more than half of his or her support and your child did live with you for more than half of the year (there are some exceptions)

The credit is phased out when your income exceeds certain levels depending on you filing status:

• » Married filing jointly — $110,000
  » Married filing separately — $55,000
  » All others — $75,000

In addition, the Child Tax Credit is generally limited by the amount of income tax you know as well as any alternative minimum tax you owe. If the amount of your child tax credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “additional” child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax. For 2006, the total amount of the child tax credit and any additional child tax credit cannot exceed the minimum of $1,000 for each qualifying child.

Volunteers
When you incur costs for a qualified non-profit organization some or all of the costs may be deductible as a charitable donation. To qualify, unreimbursed expenses must be incurred while in the service of a qualified nonprofit. In other words, personal costs associated with driving to church services are not deductible while costs of driving to church where you serve as a deacon or delegate are.

Be sure to document your expenses with receipts or cancelled checks noting the date and purpose; Here are a few examples:

• » Uniform costs for scout leaders if worn when performing donated services. Only clothing not suitable for everyday wear is deductible.
  » Cost of long-distance phone charges while soliciting funds for the United Way.
  » Vehicle costs associated with delivering meals to shut-ins for a local non-profit. You could deduct the actual reimbursement vehicle cost or standard mileage for charitable driving of 14 cents a mile.
  » Travel and hotel costs while you attend your national church convention as a delegate.
  » Cost of Santa suit rental while donating time as a bell ringer for the Salvation Army.

Your tax preparer can help you decide which charitable expenditures are deductible and how the should be donated.