Money Minute: Yet Another Data Breach; Popular Tax Deduction Threatened?

Another warning for millions of consumers about a possible breach of their credit card information.

Officials in California are trying to determine whether credit card data were stolen from the state's Department of Motor Vehicle computers. There are 24 million licensed drivers in the state. It's not certain yet how many files were accessed, if any, and what information may have been stolen.

American homeowners claim about $70 billion a year in federal tax break for interest paid on home mortgages. But momentum is picking up to eliminate or reduce that tax deduction. And now, a new report from a conservative research group finds that the tax benefit primarily helps wealthier people -- mainly by encouraging them to buy large homes. At the same time, the study says the mortgage deduction doesn't significantly encourage home buying by people with incomes of less than $100,000. %VIRTUAL-article-sponsoredlinks%Both President Obama and a leading House Republican have proposed plans to cap the mortgage interest deduction.

Good news for people who cheat on their taxes. They're less likely to be caught. The IRS audited five percent fewer tax returns in 2013 than it did the year before. That's because the agency's budget was slashed by $1 billion, and the number of employees fell by about 10,000. However, audits increased of taxpayers with incomes of more than $1 million.

Here on Wall Street last week, the Dow Jones industrial average (^DJI) and the Standard & Poor's 500 index (^GPSC) rose about 1.5 percent, while the Nasdaq composite (^IXIC) gained 0.7 percent.

Get ready for a crush of initial public offerings, including King Digital Entertainment, maker of the hugely popular Candy Crush game. In all, 14 companies are lined up to go public this week. Some bears say that's a sign the market is too frothy and set for a significant pullback.

-Produced by Drew Trachtenberg.

7 Most-Missed Tax Deductions and Credits
See Gallery
Money Minute: Yet Another Data Breach; Popular Tax Deduction Threatened?
Our lives are busy, and taxpayers may forget what donations they gave last year may get them a bigger refund. If you cleaned out your bulging closet and dropped off clothing or household goods at your favorite charity, don't forget this may be deductible on your tax return.
Taxpayers taking a full course load and working toward a degree can receive education benefits through the American Opportunity Tax Credit for college expenses, but those who took even just one class to further their career may be able to take the tuition and fees deduction. With this credit, you can deduct up to $4,000 for tuition and fees, books and educational supplies for you, your spouse or dependents. This tax deduction is especially important to remember if you qualify because the offer expires after tax year 2013.
Taxpayers can deduct state income taxes, but what about people who live in states that don't have a state income tax? The state and local sales tax deduction is useful for those who don't pay state income tax because they can deduct sales tax paid on purchases. Even people who live in states that pay state income tax can benefit if they paid more sales tax due to large purchases. This is another tax that is going away after the 2013 tax year, so don't miss out on this one.
The earned income tax credit is a refundable tax credit given to filers who earn low- to moderate- income from their jobs. The credit can be worth up to $6,044, depending on income and how many dependents you have, but one in five tax filers overlook this opportunity, according to the Internal Revenue Service. You have to file your taxes in order to get it, so even if you make less than $10,000 (the IRS' minimum income filing requirement) you should still file your taxes.
If you were looking for a job last year, you may be able to deduct costs related to your job search – even if you didn't secure a new one. Job search expenses such as preparing and sending resumes, fees to placement agencies and even travel related to searching for a new job can be included.
This credit is often overlooked and seldom talked about, but if you have an income up to $29,500 ($59,000 for married filing jointly) you can save for retirement and get an tax credit worth up to $1,000 for individuals and $2,000 for couples if you contributed to a qualifying retirement plan such as an individual retirement account or 401(k). The retirement savers tax credit is a win-win situation since contributions to your IRA may also be a deduction from income.
Taxpayers who weren't so lucky gambling last year should know that their losses can be deducted if they itemize their deductions. However, your amount of losses cannot surpass your winnings, which must be reported as taxable income. For example, if you have $2,000 in winnings and $4,000 in losses, your deduction is limited to $2,000. Make sure you have documentation such as receipts, tickets and other records to support your losses.
Read Full Story