15 Year-End Moves to Reduce Your 2007 Tax Bill
There's still time to trim your 2007 tax bill. See if these tax deductions could be right for you.
By Mary Beth Franklin, Senior Editor, Kiplinger's Personal Finance
December 2007
Advertisement
Take a quick time-out from holiday festivities for a year-end tax checkup. Do you need more deductions? Find out how to reduce your taxable income before the new year arrives: Kiplinger's Mary Beth Franklin delivers the top year-end tax moves you can make today.
1. Beware the AMT
Should you accelerate deductions to cut taxes? It depends -- you could end up with a bigger tax bill.
2. Offset Taxable Gains
Unloading a losing investment before year-end will allow you to offset taxable gains.
3. Avoid Mutual Fund Dividends
Time your year-end mutual fund purchases to avoid excess taxes through dividend distributions.
4. Donate Your IRA Distribution
If you are 70 ½ or older, here is one last chance to avoid higher taxes.
5. Boost State Sales Tax Deductions
If you plan to deduct state sales tax instead of state income tax for 2007, this may be the last year you can choose to do so.
6. Close on Your Mortgage in 2007
If you are about to seal the deal on a new home, closing on your mortgage by December 31 could earn you a big deduction on your 2007 return.
7. Who Pays the Gift Tax?
One of the least understood tax rules is the federal gift tax -- which is why it's so often overlooked.
8. Fund a Kid's Roth IRA
Give your children financial security this Christmas.
9. Score an Energy-Saving Tax Credit
A gas-efficient hybrid car and energy-saver windows can offer a last-chance tax credit for 2007.
10. Last Chance Tax Break
Act now to qualify for an expiring tax break for teens and college students.
11. Max Out Your Retirement Savings
Contributing as much as you can to your retirement account will reduce your taxable income for 2007.
12. Wait for 0% Capital Gains Tax
Taxpayers in the two lowest income tax brackets will pay no capital gains taxes next year.
13. Trim taxes with Flex Accounts
Cut next year’s taxes by signing up for a flexible spending account today.
14. Get a Receipt for Holiday Giving
New charitable contribution rules require proof of every cash donation.
15. Give More and Pay Less With Securities
When you give an investment asset, you avoid capital gains and can still deduct its appreciated value.
For more ways to maximize tax deductions, find tax forms and learn how to save on next year's income tax return:
Reader Comments (1)
Posted by: goldi at 12/31/2007 03:00:29 PM
Hi, ...don't forget the Spousal IRA. There is a great book on this topic, called "It's Your IRA". It is an excellent resource for those wanting to learn more about investing in Roth and Traditional IRAs...It is definitely worth a look.