5. Maximize pension and IRA contributions. The 2008 limits for 401(k) contributions remain unchanged at $15,500. Simple IRAs at work are also unchanged at $10,500. Even though they may or may not be tax deductible, IRAs or Roth IRAs are a great forced savings plan.
The 2007 contributions to IRAs remain at $4,000, and an additional $1,000 for those over 50 before the end of 2007. You have until April 15 to make your IRA contributions. If you file early, you can still claim the deductions and use any refund to fund the IRA. If you can't make contributions to a deductible IRA or Roth IRA because of adjusted gross income, or AGI limitations, you may want to check out Bankrate's article on non-deductible IRAs.
If you're in business for yourself, there are some excellent pension plan opportunities available, but some of the best require that you establish the plan before year-end. The real estate market hasn't been kind to investors, homeowners, Realtors or mortgage brokers.
6. Get professional help. If you're in a difficult situation when it comes to your property or profession, it makes sense to consult a professional tax advisor. I've helped individuals this year change useless capital losses to useful losses, create an opportunity to get a refund of taxes paid in prior years, collect unemployment, avoid gains on foreclosure, maximize interest deductions and convert potential short-term gains into long-term gains. All this is possible with the proper tax planning and advice. You may have thrown bad money after good in the real estate market, but now is not the time to be a miser on advice.
7. Make sure you have the right business entity. If you're running your business as a sole proprietor, you may want to consider incorporation. Not only do corporations give you shelter from some financial risks, they also give you flexibility for saving on taxes. But the time to set up the corporation is now, to have it in place at the beginning of the year. If you're operating a business as an LLC or conventional corporation, in most cases you have until March 15 to convert it to an S corporation for tax purposes for 2008. Read about the advantages of an S corporation this Bankrate story " Structure as an LLC or S corporation?" and in " Rules of an S corporation."
8. Consider filing your tax return electronically. Apart from reducing your carbon footprint, you can get your refund faster and be assured that you won't get a notice that your return had a mathematical error. While the mailman can lose your refund check, direct deposit rarely goes awry.
You can also prefile and arrange to pay by the due date through automatic withdrawal or credit card. No more rushing to the post office at midnight on April 15 with insufficient postage. No more stapling the W-2 in the right place and wondering if the IRS will like it.
In most cases, one computer transmission of one file will take care of the IRS and your state tax obligations. Of the 139.3 million returns filed in 2007, 80 million, or about 57.4 percent, were filed electronically. More than 22.6 million returns have been e-filed by taxpayers doing their own returns, up from 20.3 million from the same period last year. Go to the IRS Web site for more information.