Tax season is here and I am finding that some taxpayers are unaware of the many tax benefits available to them. I’d like to highlight a few tax benefits that can be missed by poor communication:

• One such tax benefit my firm is making sure our clients are aware of, is the energy tax credit. This credit applies to any large or small home repair or improvement that is considered an energy-efficient repair or improvement. Costs incurred for things such as new windows, new doors, new insulation, new hot water heater (the list goes on and on) are eligible for this unique tax credit. The problem is that many taxpayers are not aware of these huge tax benefits.

As a rule, every one of our staff is instructed to make inquires of our clients regarding home repair or improvement expenditures they may have made during 2006. My advice to you is not to wait for your tax preparer to bring it up at your tax meeting, take the initiative and bring it up yourself.

• A second tax benefit that many taxpayers simply do not take advantage of is the tax benefit for contributing to a traditional IRA. A $4,000 IRA contribution can be worth $1,000 or more in tax savings. In effect, your IRA only costs you $3,000.

• A third tax benefit that could save thousands of dollars relates to college education expenses for your child. Oftentimes college students earn enough money to cause them to have to file a tax return. If they make enough money and the 1098 you receive is in your child’s name, it may make sense to have your child claim the education expense themselves, rather than take the benefit as the parent.

This makes sense where the parents make too much money (more than $110,000 in 2006) and do not get the benefit of the education expenses they have paid for their child. In order to do this you cannot claim your child as a dependent, which means you give up $3,300 in dependent exemption on your federal return. The loss of the exemption may be more than offset by your child’s ability to claim the education expenses on their individual income tax return.

• A fourth tax benefit relates to mutual funds that you sell during the year. Most every mutual fund permits investors to reinvest their dividends, interest and capital gains. These dividends, interest and capital gains, even though reinvested, are taxable to the investor. When it comes time to file your tax return, the tax preparer will ask you what your cost basis is in the mutual fund. The wrong answer is to give your preparer only the amount that you paid for the fund.

You want to give your preparer what you paid plus the cumulative dividends, interest and capital gains that you were taxed on during your ownership of the fund. Many mutual fund investors, as a consequence, pay taxes twice on their mutual funds; once when they are taxed on the dividends, interest and capital gains and a second time when they sell the fund. These dividends, interest and capital gains are treated as additional cost basis when you sell your fund investment, but only if your tax preparer adds these amounts to your cost basis.

• A fifth tax benefit relates to rollover IRAs. This time it involves New Jersey. If you were a participant in a qualified retirement plan in which you made tax deferred contributions and rolled over your plan assets to a rollover IRA, you could be overpaying your New Jersey income tax on any distributions you receive from the IRA.

For example, if you were a participant in a 403(b) plan that was subsequently rolled over to an IRA, you will be taxed on all of the distributions from the IRA on your Federal income tax return, however, because New Jersey taxed your deferred contributions to your old 403(b) plan (which you rolled over), such contributions may be withdrawn from your IRA tax free for New Jersey purposes. The point I want to make here is this-do not assume that all of your rollover IRA distributions are subject to New Jersey income tax.

• The last item I want to address relates to electronic filing. In my firm’s last client newsletter I made a point that we were going to not only e-file all returns this year but also push our clients to have their refunds automatically deposited into their bank accounts since this reduces the waiting period for refunds down to two weeks on the Federal return.

Many of the large tax preparation firms are pushing refund anticipation loans, for which they charge a fee. E-filing your return and having your money automatically deposited into your bank account means you will receive your refund quickly and avoid having to pay any fees for a refund anticipation loan.