It’s three months until the end of the year, but the experts say it's not too early to start thinking about tax planning. There are some tax advantages that expire at the end of 2009.
It has been a tough year in the stock market, even though things have been looking up lately.
If you talk to your financial adviser, mention the possibility of writing off investment losses.
"Such things like taking your investment losses. Nobody likes to lose money, but if you have lost money on your investments...why not sell them?” says CPB trust services officer, Diane Chong. “And you can write up to three thousand dollars of your investment losses against ordinary income."
If you're in the mood, you can give someone a gift of money.
"So anybody can actually give to anybody else $13,000 a year and a lot of retirees use this because that's a way to reduce their taxable estate,” she explains.
If you have a favorite charity, consider lowering your tax liability with a contribution.
But unless Congress acts, charitable giving will be narrowed at the end of the year.
"Another thing that's actually going to expire this year is you can make charitable deductions directly from your IRA,” she said.
The advantage to that is a win-win for you and the charity.
"This is a great way to do it versus taking the money from your IRA and being taxed on it. You can give it directly to the charity and they can get the full benefit from that,” she said.
Many companies offer employees the opportunity to use flex spending for medical purposes or child care.
Let's suppose you have a thousand flex spending dollars. "Now it's getting toward the end of the year and you haven't spent your thousand dollars. So you should maybe go out and buy a box of contacts or some over the counter medicine just so you can use that money up because of you don't use it, you're going to lose it,” she explains.
