20 Year-End Moves to Reduce Your 2008 Tax Bill
There's still time to trim your 2008 tax bill. See if these tax deductions could be right for you.
December 22, 2008
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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. Boost Your Sales Tax Deduction
If you deduct state sales taxes rather than income taxes on your federal return, buying a car can boost your deduction.
2. Rush to Close
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 2008 return.
3. Go Green But Don’t Rush
Planning to make energy-saving improvements to your home? Wait until 2009 and score a tax credit.
4. Be Generous
Whether donating cash, clothes or a car, don’t forget to get a receipt.
5. Max Out Your Retirement Savings
For most people, the best way to cut your tax bill today is to maximize your retirement savings for tomorrow.
6. Winning With Losers
Unloading a losing investment before year-end will allow you to offset taxable gains or other income.
7. Don't Buy a Tax Bill
Time your year-end mutual fund purchases to avoid excess taxes through dividend distributions.
8. Trim Taxes with Flex Accounts
Cut next year’s taxes by signing up for a flexible spending account today.
9. New Kiddie Tax Rules for 2008
Rethink strategies for shifting income to family members in lower tax brackets.
10. Tax-free Capital Gains Are Here
Some taxpayers will pay no capital gains taxes on their 2008 returns.
11. Put Away Your Check Book
Instead, donate appreciated securities to your favorite charity.
12. Why Your Kids Need a Roth IRA
Looking for the perfect gift for your children? Open a Roth for them, and start them on the road to retirement security.
13. Understanding the Gift Tax
If you don't use your $12,000 annual exclusion by December 31, you lose it.
14. IRA Strategies for Market Declines
Shrunken IRA balances mean a smaller tax bill when you convert to a Roth IRA.
15. Beware the AMT
Should you accelerate deductions to cut taxes? It depends -- you could end up with a bigger tax bill.
16. New Tax Breaks for Homeowners
Whether you are a first-time buyer or have lived in your house for years, don't overlook these new tax breaks.
17. Benefit Right Now from New Tax Credits
Don't wait for next year's refund. Change your deductions to boost your pay.
18. New Rules on Home-Sale Profits
Two groups of homeowners face new rules on tax-free profits when they sell their property.
19. Home Foreclosures and Taxes
A temporary provision excludes forgiven mortgage debt from income taxes.
20. Time for an IRA Distribution?
You MUST take your required minimum distribution by Dec. 31, 2008, but you can skip it in 2009.
For more ways to maximize tax deductions, find tax forms and learn how to save on next year's income tax return:
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