So, what tax deductions have I created for my 2004 filing period? Initially, I am going to deduct a percentage of points off of my latest refinance. The deduction will amount to total amount of points paid divided by total months of loan. This will not be a big deduction, but every little bit helps.

In addition to this amount, however, I will also deduct full $3,000 in points that I paid on my January 2004 refinance! I am able to claim this deduction because I "accelerated" deductibility of points by paying of January mortgage with August refinance.

By refinancing twice, I get a lower interest rate and a healthy tax deduction. Ah, value of owning a home.

The IRS reported that underreporting was mostly linked to understated income, not overstated deductions. The agency also determined that most of understated income was related to business activities, not wages or investment income.

While these figures may appear shocking, they more or less match results found in a 1988 study. The numbers are also artificially inflated by individuals that fail to file returns and pay taxes. The IRS is not expected to take any new course of action based on these results.