Ten Ways to Lower Your Tax Bill


Ten Ways to Lower Your Tax Bill

There are several steps you can take now to save money come April.

From December 5 through December 18 Kiplinger's Mary Beth Franklin counted down the top ten moves to make before year end to lower your 2006 tax bill. If you happend to miss one, here they are all. The advice in the tips below is bound to help you save money at tax time.

1. Don't Buy a Tax Bill
If you're thinking of purchasing mutual funds between now and the end of the year, think twice -- you might end up owing Uncle Sam.

2. Beware the AMT
Should you accelerate deductions to cut taxes? It depends -- you could end up with a bigger tax bill.

3. Donate Appreciated Assets
Giving stocks or mutual fund shares instead of cash to charity will let you score a deduction and avoid a capital gains tax bill.


4. Winning With Losers
Look on the bright side: Selling a losing asset at this time of year can be a great way to rebalance your portfolio and save on taxes.

5. Understanding the Gift Tax
If you don't use your $12,000 annual exclusion by December 31, you lose it.

6. 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.

7. Lower Your Taxes by Thinking Green
Outfitting your home with new storm doors and windows or buying a gas-efficient hybrid car can help you score tax credits.


8. 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.

9. Time for an IRA Distribution?
The law requires you to begin taking money out of traditional IRAs or face a penalty. But a new temporary provision allows you to direct your IRA distributions to a charity tax-free.

10. Trim Taxes with Flex Accounts
If you typically under-fund your flexible spending account -- or skip participating altogether because of concerns about the use-it-or-lose-it rule -- fear no more.