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Jose Cohen,CPA
Internal Revenue Service
Servicio Rentas Internas (IRS)

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Last Minute Tax Suggestions
Monday, 12.01.2008, 07:48pm (GMT)

  • 1- Donate to charity
    : It may be as easy as cleaning out the closet. Donating items to charity before the New Year may help taxpayers who itemize their taxes claim a bigger tax refund.  And remember; don't bother donating socks that need darning. The Pension Protection Act of 2006 stipulates that everything must be in "good used condition or better." To place a value on items donated, go to  Salvation Army or the TurboTax ItsDeductible web site
  • 2- Sell losing investments: Selling a losing investment and locking in that tax break is a smart tax strategy. Taking a loss this year may help taxpayers offset income from other gains or income, but that loss is limited to $3,000. Any amount in excess of that must be carried over to their 2009 tax return.
    Many times, people hold onto losing investments, hoping they'll pan out eventually, but if the investment is consistently losing money, you may be better off without it. Take the loss, buy a similar investment that is expected to increase in value, and move on.
  • 3- Wait to go green: There are substantial tax credits available to taxpayers who make energy saving improvements to their home. But people thinking about adding solar heating or even new windows, doors or insulation that meet energy efficiency standards may want to wait until 2009 to get the most for going green. For taxpayers installing solar electric property at a cost more than $6,667, the credits will be larger for expenses made in 2009 than 2008.
  • 4- Prepay some bills: Taxpayers can prepay a few of their 2009 bills in 2008, and get to write them off on this year's tax return. Homeowners, for example, can make their January mortgage payment in December, giving them one more month of interest to deduct. Those who have large and predictable medical bills, such as braces for the kids, can consider making all the payments before Dec. 31. The IRS allows families to itemize and deduct medical and dental expenses that exceed 7.5 percent of their adjusted gross income (but this is only 2% of NJ gross income for the NJ return!)
  • AND REMEMBER, if you charge deductible expenses to a credit card by 12/31/2008, you can deduct the amounts on your 2008 tax return---and defer payment of the credit card balance to the future!

Jose Cohen

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