From USAA: 5 Ways to Save on Taxes – Before December 31st

From our friends at USAA:

It may seem too early to think about taxes, but you can possibly
save hundreds of dollars or more by getting your deductible ducks in a
row before the year ends. As with most deductions, income restrictions
may apply so check with the Internal Revenue Service to get details. For starters, see if you can take advantage of these five tax-saving moves:

1. Donate. Spend a Saturday morning going through
stuff you don’t want. “Take those clothes and items [in good, used
condition] to your local charitable organization right away,” says
Sally Herigstad, a certified public accountant and author of Help! I
Can’t Pay My Bills
. “Be sure to get a receipt to verify the donation
was made.” Popular tax-preparation software packages have charitable
donation calculators built in, making this one of the easiest
deductions you may be able to take.

2. Pay deductible expenses early. Make your January
house payment in December so the interest deduction is included in your
2008 tax return. And, in December, pay your property tax that is due in
January (for the same reason).

3. Tax-loss harvesting. In light of this year’s
stock market struggles, you may want to consider taking some of the
losers and selling them to realize the loss for tax purposes. Check
with your tax advisor regarding your situation.

4. Put money toward retirement. If you haven’t
started contributing to a 401(k) or similar retirement account, now’s
the time to begin. Your 401(k) contributions are not deductible, but
the money you put into them comes from pretax dollars. So, in effect,
you’re reducing your taxable income. If you have an IRA, don’t forget
that contributions made to Individual Retirement Accounts
may be tax deductible. And, in many cases, you can claim IRA
contributions made after Dec. 31, 2008 – right up through tax day,
April 15, 2009. For 2008, taxpayers under age 50 can contribute up to
$5,000; up to $6,000 for those 50 or older. For accurate information
based on your personal financial situation, you should consult a tax
professional or get more tax tips online from the IRS.

5. Make smart moves – now. Pondering a job move?
Decide quickly if you want to deduct it from your 2008 tax return. You
can deduct job-related moving expenses in any given year if you move at
least 50 miles from your old home and remain employed full time for at
least 39 weeks after the move. If you haven’t met the time test by tax
day, you can still deduct moving expenses on your 2008 return, provided
you expect to stay in the job for at least 39 weeks. But if you quit or
get fired before the time period is met, you have to report it to the
IRS. See IRS Publication 521
for details. Military moves due to a permanent change of station also
qualify for the deduction, but don’t have to meet the distance and time
requirements, says J.J. Montanaro, a CERTIFIED FINANCIAL PLANNER
practitioner at USAA.

I really appreciate all the advice that USAA provides for us – good suggestions from smart people.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.