Taxes: Last, best money-saving options

It's too late to sell more shares of losing stock or make donations to charity for tax-year 2008. Yet many people, whether they itemize or take the standard deduction, still have a few good options for reducing their tax bills and holding on to a bit more money. 

•IRA contribution for 2008. Depending on your income, you can contribute up to $5,000 to a traditional for 2008 and get a full or partial tax deduction. (Folks age 50 and over can contribute up to $6,000.) The deadline for setting up or contributing to an existing account is the same as for filing your return: April 15. Details on who's eligible for a deduction are in IRS Publication 590, Individual Retirement Arrangements. Also check that publication for rules on SEP-IRAs, intended for the self-employed.

•Catch-up IRA contribution for military. Because  the IRS generally gives members of the military and support personnel  a filing deadline extension of 180 days after they leave the combat zone, they also have an extension of their IRA contribution deadline. And under the 2006 HERO Act, the time window is still open for members of the military who received tax-free combat pay in 2004 or 2005 and wish to make IRA contributions for those years. The deadline for making those special back-year contributions is May 28, 2009.

•First-time homebuyers credit. Through the economic stimulus package, first-time homebuyers are eligible for a tax credit worth up to $8,000. Taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. The credit begins to phase out as income rises. The IRS defines a first-time homebuyer as someone who hasn't owned a home for three years. For more details, click here. 

•Recovery rebate credit. This credit is last year's stimulus payment with a slightly different name. Most taxpayers who filed taxes last year already got their full payment--up to $1,200 per couple, $600 per individual, and $300 per child--but a few may not have. For example, if you had a baby in 2008, you can apply on your 2008 return for the $300 child credit, provided the child has a Social Security number. Folks who didn't earn enough in 2007 to qualify but earned more in 2008 might also be eligible. Check here for more details. 

 --Tobie Stanger

Comments

[Tom]

Enough of this annual nonsense. Searching for every loophole and deduction. Lets get a flat tax now.