Typically individuals don’t begin the tax preparation process till February and December is an even better time to start. Why? Because now is the time to take action to take action to save in taxes. And it’s also a good time to confirm you paid sufficient income taxes and to remember to note your auto mileage for the end of year.
Some ways to increase your deductions and credits without additional cash outlay:
- Prepay your fourth quarter income tax estimates.
- Prepay any January tuition.
- Prepay your January mortgage payment.
And if you have some discretionary dollars. Make a charitable deduction. And if you’re thinking of a new car, make it an energy efficient hybrid for special tax benefits.
Want to avoid paying the underpayment of income taxes penalty? Pay at least as much as you paid in 2007 or 90% of your 2008 liability.
Found this information helpful? Please let me know. Want more information about basic investing? I will be offering a investment management class in January. Looking for someone new to help you with your taxes? I do individual income tax preparation.