Tax time is still a few months away, but experts recommend acting now if you want to maximize those deductions. This year, it's especially important to cut your losses, literally.
"A lot of people have a lot of losers in the stock market and you can sell those, to offset gain, or offset your other income, up to $3,000," said Elizabeth Maresca, a tax professor at Fordham Law School.
But losses this year weren't limited to the stock market. The United States Labor Department said the unemployment rate is the highest it has been in 15 years. So for those who've lost a job and are looking for work, remember that your job hunting expenses are deductible.
"If they're paying fees to online job searches or they're going to seminars for resume writing or career building, all those expenses are deductible and they should be maintaining some notes on how much they're spending," said Maresca.
Another tip for the newly unemployed is if you're thinking of withdrawing money from your IRA or retirement account to make ends meet, try and hold off until January. This way it becomes an additional part of next year's income, which might be lower if you've lost your job.
Some additional tips include:
- Prepaying January's mortgage payment before December 31 if you can, and add more deductible mortgage interest to your list of write-offs
- Prepay property taxes, since they're deductible as well
- If you're considering donating to a charity, do it before the end of the month. You can put the payment on a credit card and get the write-off this year, while paying the bill in 2009
- Start an IRA or deposit money into your current one and take the deduction for 2008 -- you can actually make that deposit anytime before April 15 to get the benefit
Also, get ready to file as soon as that W-2 comes in January. If your paperwork is ready now, you'll get that refund much faster.
For more information, visit the IRS website at www.irs.gov.