Only a few weeks remain in 2008. Make sure you’re prepared for the upcoming tax season by taking these six steps I found in USA Weekend magazine.
1. Withholdings. Are you having too much taken out of your paycheck? Now is the time to find out. Instead of giving the government an interest-free loan in 2009, take more money home. Use the IRS withholding calculator to get a more accurate number.
2. Stock Losses. Chances are if you have money in the stock market, you lost money in the stock market. If you sold your investments and lost money, you can deduct up to $3000 of that (or $1500 for married couples filing separately.) That could help you relieve some of the tax burden.
3. O% Capital Gains. If you did make money in long-term holdings and you fall in the 10% or 15% tax bracket, those gains are tax-free.
4. Car Breaks. New cars purchased in 2008 that are used just for business driving can be claimed for a “bonus depreciation” of up to $11,160. Hybrids also have their own tax breaks.
5. Standard Deduction for Real Estate Taxes. If you decide not to itemize, you can claim up to $500 in deductions for property taxes or $1000 for couples filing jointly.
6. IRA Charitable Contributions. If you are 70 1/2 or older, you can take up to $100,000 our of your IRA each year tax-free if you give that money directly to a charity. You won’t get a charitable deduction but it could push you into a different tax bracket which could mean other tax breaks.