1. Harvest your investment losses in taxable accounts by Dec. 31 to offset any capital gains and/or up to $3,000 of ordinary income (up to $1,500 each for married filing separately). You can carry over any unused losses to future tax years without expiration. Watch out for the wash sale rule. For more, see Get A Tax Break By Harvesting Losses.   2. Max out the contributions to your qualified employer retirement plan and your IRA. Contributions to your 401(k), 457 or 403(b) plan reduce your taxable income and may have the added bonus of an employer match. Contributions to your traditional IRA may be tax deductible, in many cases. What's more, money in these accounts grows tax deferred, so it has a chance to compound faster. Employer-plan contributions must be made before the end of the calendar year. But, you have until April 15 of next year to make this year's IRA contribution. And don't forget to contribute the additional catch-up allowance, if you're 50 or older. For more, see Saving For Retirement: IRA Vs. 401(k).   401(k)s and other qualified employer plans   Contribution 50 or older catch-up 2005 $14,000 $4,000 2006 $15,000 $5,000   Traditional IRAs and Roth IRAs   Contribution 50 or older catch-up 2005 $4,000 $500 2006 $4,000 $1,000 2007 $4,000 $1,000 2008 $5,000 $1,000   3. If you're self-employed, open a business retirement account such as a SEP-IRA, SIMPLE IRA, qualified retirement account (QRP)/Keogh, or Individual 401(k). Contributions are tax deductible and grow tax deferred. For QRPs, as long as you open your account by Dec. 31, you've got until the time you file your income tax return next year, including extensions, to make this year's contribution. For more, see Small Business Retirement Plans.   4. Open and contribute to a Roth IRA. Contributions to a Roth IRA aren't tax deductible, but the money grows tax deferred. Even better, you can withdraw the money tax free, if you follow the rules for the account. You can contribute to a Roth IRA if you have earned income and your modified adjusted gross income (MAGI) is $95,000 or less ($150,000 or less for married couples, filing jointly). The maximum contribution phases out, becoming zero when your MAGI reaches $110,000 ($160,000 for married couples, filing jointly). For more, see What Is An IRA And Why Should I Invest In One?   5. If you make quarterly estimated tax payments to your state (and alternative minimum tax  [AMT] is not an issue for you), make your fourth-quarter payment by Dec. 31 instead of waiting until the New Year. You may even want to pay your estimated state income tax balance due for next April 15 as well (you'll need to run some projections—Schwab clients can log in to Schwab's Tax page). That way you can accelerate it all as an itemized deduction on this year's tax return.     6. Prepay the second installment of your property tax by Dec. 31. Many counties bill taxpayers in two installments, with one due in November and the other in February. If you make your February payment in December, you can take it as an itemized deduction on this year's tax return. Again, watch out for AMT, which disallows deductions for state and local taxes.   7. Make January's mortgage payment in December to boost this year's interest deduction. Also, consider converting non-deductible credit card debt to a tax-deductible home equity loan or line of credit.   8. Open and fund a 529 college savings account. You'll be saving for your child's or grandchild's education and can gain immediate tax benefits, as well. For example, a 529 plan allows you and your spouse to contribute up to $110,000 in 2005 without incurring gift tax (see below) so long as you elect to treat the contribution as being made over five years. Many states also offer a current income tax deduction for all or a portion of the contribution. What's more, money in your 529 account grows tax deferred and may be withdrawn tax free if you use it for qualified education expenses. This tax-free status is technically set to expire after 2010, along with everything else in the Economic Growth and Tax Relief Reconciliation Act of 2001 (the 2001 Tax Act). Even if the rules revert back to the old law, qualified distributions would still be taxed at the child's lower income tax rate. For more, see Saving For College: 529 College Savings Plans.   9. Donate appreciated securities you've held for more than one year to a qualified public charity. You'll receive a full fair-market-value deduction (up to 30% of your adjusted gross income in most cases, with five-year carry-over on any unused portion) and pay no tax on capital gains. You could also sell depreciated securities to take the tax loss first, and then give the cash to charity. Because of Hurricane Katrina, special rules apply to charitable contributions made from August 28 through December 31, 2005. If you live in a designated disaster area, you may also be eligible for other benefits, including increased deductibility of hurricane-related casualty losses. For more information, see the Internal Revenue Services’ Help For Hurricane Victims.   10. Take advantage of the annual gift tax exclusion. For 2005, you can give up to $11,000 each to any number of persons without incurring a taxable gift ($22,000 for spouses "splitting" gifts). In addition, you can make unlimited payments directly to medical providers or educational institutions on behalf of others without incurring a taxable gift. The lucky recipient of the gift owes no gift tax or income tax, and doesn't even have to report the gift unless it came from a foreign source. Sunset alert In Sunrise, Sunset: Tax Planning In A World Of Uncertainty we detail a series of important tax provisions set to take effect in the coming years, unless Congress acts in the meantime. Notably, the temporary AMT relief that was extended through 2005 is set to expire for 2006. While it’s likely Congress will extend the relief, so far they are yet to take action. In addition, provisions of the 2001 Tax Act limiting the phase-out of itemized deductions and personal exemptions for high income earners are set to kick in for the 2006 tax year. These changes could impact your decision to accelerate or defer certain items of income or deductible expenses between 2005 and 2006. As usual, check with your tax professional first.  The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, or legal, tax, or investment advice, or a legal opinion. Individuals should contact their own professional tax advisors or other professionals to help answer questions about specific situations or needs prior to taking any action based upon this information. Tax laws and authorities are subject to change, either prospectively or retroactively, and any subsequent change could have a material impact on your situation.

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