Year End Tax Planning

With the end of the year approaching now is the time to look for opportunities to save on income taxes. Here are some items you should look for.

• Determine whether bunching deductions into 2007 or 2008 will enable you to itemize deductions for at least one of the years.
• Maximize the $12,000 per donee annual gift tax exclusion if estate taxes are a concern.
• Maximize contributions to retirement plans.
• Look to offset any capital gains with any losses you might have, don't forget you can claim an extra $3,000 per year in losses over gains.
• Estimate income and deductions year to date. Consider if accelerating or delaying income can reduce your tax bill.
• If you are over 70 1/2 and have not taken you required minimum distribution from an IRA, consider making a direct contribution from your IRA to a qualified charity.
• Homeowners can claim a credit of up to $500 for energy improvements (limited to $200 for windows) but only if completed before 2008.
• The deduction for qualified higher education expenses is set to expire at the end of 2007, so consider making tuition payments early.