Depending on your AGI, you may be able to deduct your alimony payments. Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Be aware, however, if you do not provide your former spouse's Social Security number, you may have to pay a $50 penalty and your deduction may be disallowed.
Your Child's College Savings or Your Retirement
Another change in this year's tax law is a new tax rate for stock dividends. The new rate is 15 percent, down from as high as 38 percent. Your 1099-DIV prepared by your mutual fund firm or broker will tell you which portion of your dividends will be taxed at the new lower rate.
Unfortunately, many mutual fund companies and brokers didn't get this right and they sent out several hundred thousand 1099-DIV forms that are probably wrong.
If you received two 1099 forms from your mutual fund company, do not throw away either. Although the differences between the two may be too subtle to detect, the second form is probably correct.
The form is not required to file your taxes — you just need the information — so call your mutual fund company and ask them to detail the correct dividend tax information. If you already filed and erroneously applied the 15 percent rate to dividends that do not quality, the IRS will send you a bill for the difference along with interest calculated from April 15 (currently at 4 percent).
This year, depending on your AGI, you may be able to deduct a portion of the tuition bill for your children or even yourself.
There are two credits available: the Hope Scholarship credit and the lifetime learning credit. The Hope Scholarship credit, valued at up to $1,500, can be applied to the first two years of college tuition and fees. In addition, the lifetime learning credit can be applied toward the educational years beyond college. The lifetime learning credit, depending on your AGI, can be as high as $2,000.
Home Sweet Home
If you purchased a house in 2003 or refinanced your mortgage, the points you paid are fully deductible.
Last year, 1,085,000 new homes were sold, compared with 973,000 in 2002. The points on a new mortgage can be completely deducted in the year of purchase, whereas the points paid during a refinancing can be written off over the life of the loan. Additionally, if you paid the property tax bill of the seller at the time of closing, you may write off that amount on this year's tax bill as well.
E-mail Mellody with your personal finance questions.
Mellody Hobson, president of Ariel Capital Management (arielmutualfunds.com) in Chicago, is Good Morning America's personal finance expert. Ariel associates Matthew Yale and Aimee Daley contributed to this report.