Don't Mess With Taxes

Are you ready to party!? I don't want to get in the way of your New Year's Eve preparations, but I do want to mention a few literally last-minute tax moves that could be a real cause for celebration.

Since time is fast running out, I'll be quick.

Charitable giving
You've got to make charitable gifts today if you want to claim them on your 2008 return. This means getting any clothing or household appliances to your favorite charity's drop-off location before it closes this afternoon. 

You have a bit more leeway with monetary contributions. Most nonprofits take credit cards, so call this morning and charge your 2008 donation. As for gifts by check, Joe Kristan, who writes Tax Update items for Roth & Company, PC, has the scoop on getting your contribution in the mail.

Investment moves
Did your portfolio suffer some losses? Whose didn't? If you haven't already sold those stinky stocks, call your broker now! If you do have any gains, you can use those losses to offset them. If everything is on the loss side of the ledger, you still can use up to $3,000 in losses to help reduce your ordinary income.

Home tax breaks
Don't forget the tax breaks offered by your home. Make your Jan. 1 mortgage payment today so that the interest amount can be deducted on your 2008 Schedule A. The same early-payment strategy applies to deductible real estate taxes.

State and local sales taxes
Congress finally got around in late October to renewing the sales tax deduction. Most folks will use the tables provided by the IRS instead of tallying the state and local levies on hundreds of register receipts. But one large sales tax amount is worth noting: the amount charged on an auto purchase. You can add that sales tax amount to the table's number. I'm not saying you need to rush out and buy a vehicle today, but I am just saying if you're close to making such a purchase, it might be worth it to close the deal today.

Automotive tax benefits
And if that new auto is a hybrid, you could get a tax twofer. The tax credit for hybrids is still in effect. The only problem is that the amounts for the most popular hybrids are long gone or fading fast. Toyota's hybrids no longer carry any added tax benefits. Tax credits for Honda hybrids disappear on Jan. 1, 2009. So if you want a hybrid Accord or Civic, get to your Honda dealer today.

Higher education
Going to college or got kids in school? Then William Perez, who pens About: Tax Planning: U.S., says you should consider paying some of those upcoming higher education costs today. Check out his advice on prepaying college costs.

OK, enough tax talk. I'll let you get to these final tax tasks so you'll still have plenty of time to get ready for your New Year's Eve festivities.

Have a fantastic time tonight and be sure to raise a glass of bubbly to salute not only the arrival of 2009, but also all the tax-smart year-end moves you've made.