Press Room

Don’t miss these last-minute tax breaks

Money Management

Monthly financial advice
from the MACPA

For release: December 2008

The tax season deadline is the last thing most of us want to think about during the holidays.

Although April 15 may seem a long way off, now is the time to make sure you’ve taken advantage of some of the tax breaks available to you in 2008, according to the Maryland Association of CPAs. That’s because many opportunities to reduce your tax bill will expire once the new year begins. With that deadline in mind, here are some that you shouldn’t miss.

Maximize your retirment savings

If you haven’t made the most of all your tax-advantaged retirement account opportunities this year, now’s the time to do it.

For example, if your company offers a 401(k) plan, your salary contributions to the plan allow you to defer tax on that salary until withdrawals are made. If no 401(k) plan is available to you, check out other tax-advantaged options, such as individual retirement accounts and Roth IRAs. Although you have until April 15, 2009, to make your 2008 IRA contribution, it’s a good idea to contribute as much as possible under the rules to these accounts before the year ends. This step should be a top priority because it helps you to accumulate a fatter nest egg for your retirement while offering valuable tax breaks.

Make your charitable donations

If you’ve been planning to give a gift of cash or goods to your favorite charity, make sure you do it before December 31. If you itemize, you can deduct your donation on your 2008 tax return, racking up another chance to reduce your tax bill. So if you have an urge to do good, act on it before the year ends.

Take your losses

This has been a tough year in the stock market. If you have incurred losses on individual stocks, mutual funds or other investments that are not in a retirement account, you should consider your options.

You can either hold on to what you own in hope that its value will rise in the future or sell it and take a loss on the investment. If you choose to sell, you can deduct up to $3,000 in capital losses against your 2008 gross income when you file your tax return. If your loss is greater than $3,000, you can deduct the excess amount from income in future years.
Remember that selling might not necessarily be the right choice if you believe that your investment will increase in value in the future. That’s why it’s a good idea to consult your CPA about this decision, because the best step may be different for each investment. But it’s encouraging that even a losing investment can offer some benefits if you choose to sell it before year end.

Get organized

Instead of scrambling to find your paperwork during tax season, take some time now to sort through your files so your documents are in the right order and easy to locate when you need them. This step won’t guarantee you any particular tax breaks, but it will make it easier to make sense of your financial situation when it is time to file your return and improve the likelihood that you’ll be prepared to claim all the deductions you deserve.

Your CPA can help

Even though it’s already December, it’s not too late to lower your tax bill for 2008 by following some of the steps described here. Remember that if you have questions about
the best options for you and your family, you should turn to your local CPA for the answers. He or she can simplify complicated decisions and offer the advice you need.

Only CPAs are equipped to address your full range of financial needs with integrity and insight. In Maryland, CPAs must pass a rigorous two-day examination, adhere to strict ethical and professional standards, and, beyond college, complete 80 hours of continuing education every two years to be certified by the state — accountants do not.

Your doctor is certified; your lawyer is certified. Make sure your accountant is a certified public accountant.

For CPA referrals in your area, contact the MACPA at (410) 296-6250 or click here.

The Maryland Association of Certified Public Accountants (MACPA) is a statewide professional association that provides leadership, information and services for its nearly 10,000 CPA members, who are employed in private practice, industry, government and education. CPAs are business and financial professionals who have passed a rigorous two-day examination in order to be licensed by the state. CPAs are committed to protecting the public interest, and must adhere to stringent ethical and professional standards and continuing professional education requirements.

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