Four End of Year Tax Strategies to Save You Money on April 15th

The New Year is fast approaching. What should yousome of your holiday gift money on your child's or
be doing with your finances between now andgrandchild's education?
January 1, 2009? Take the first step, which is toCollege inflation runs about double (maybe more) the
recognize that this is an important time of year to planrate of inflation in the economy. Now is the time to
for your financial future. Before the Ball drops in Timesstart putting money away for tuition, room, and board.
Square, we have the opportunity to trim our taxes,Check out the various options open to you, including
boost our retirement savings, and perhaps help others529 plans, education IRAs, state tuition plans, etc.
less fortunate than ourselves.A small amount placed into one of these accounts
Tax Harvestingtoday can make a significant difference in the years to
If you own any investments that are worth less todaycome. The younger the child, the more impact you can
than when you purchased them, it makes sense tohave on the cost of their tuition.
take advantage of those losses to offset any gainsGive and you shall receive
you might see this year. Even if you have no gains toThose aged 70 and one half and older have the
offset, you can take up to a $3,000 loss againstopportunity to save money on taxes and support their
income this year and carry any remaining losses forfavorite causes at the same time. The IRS will allow
use in future years.you to take your RMD (Required Minimum Distribution)
If you think your "loser" investment will recover itsthis year and have the IRA custodian send it directly to
value sometime in the future, you can buy theyour favorite non-profit. It could be a little tricky, so you
investment back with one caveat. You must waitshould consult your tax advisor first, but what a great
more than 30 days after the sale to buy theway to avoid paying taxes on money that must be
investment back, or the tax loss will not be available totaken out of your IRA anyway, and help others
you. This is called the "wash sale" rule.simultaneously. Just do it before the end of the year.
Retirement PlansIf you just turned 70 and one half this year and are
If you have access to a 401(k) or a similar retirementconsidering delaying your first RMD until April 1, 2009,
plan at your job, think about boosting your contributionplease consider this carefully. The upside to delaying
for the remainder of 2008. Now is the time!!! Callyour distribution is you can delay the tax due until April
somebody, get online, do whatever you have to do to15, 2010. The downside to this strategy is you will also
raise your contribution, but put as much as you can inhave to take your 2009 RMD in 2009, giving you two
your retirement plan this year. Come April, you'lldistributions in one year.
appreciate the tax savings, and come retirement, youDo you really want to pay taxes on both distributions in
might find you'll have more than you planned for.one year? Might that perhaps boost your tax rate up
If you are self-employed, there are many retirementto the next notch in 2009? Only you and your tax
plans available to you. Some of them allow you toadvisor know the answer.
start contributing in December for the next year, andMost financial advisors are very busy this time of year
some allow you to wait until you file your taxes. Withcalling their clients, discussing possible strategies on
help from your tax or financial advisor figure out nowhow to maximize their wealth. Take advantage of this
which plan works best for you.small window of opportunity before the year is up to
Holiday presents that lastsave on taxes, fund retirement, care for your family's
Buying the kids in your life new bikes and new clothesfuture and help those less fortunate this holiday
will always be appreciated, but how about spendingseason.