The end of the year is approaching but it’s not too late to reduce this year’s tax bill. However you need to be careful not to do anything that will cause you to pay more in 2010 than you would save on your 2009 federal income tax. Here are three year-end tax strategies for individuals from the experts at smartmoney.com

1. Sell Loser Stocks Held in Taxable Accounts

Cut your losses by selling those doggy investments held in taxable brokerage firm accounts. The amount you lose can lower your 2009 tax bill because you can deduct capital losses against your capital gains for the year. If your losses exceed your gains, you’ll have a net capital loss for the year. You can deduct up to $3,000 of net capital loss against your 2009 ordinary income from salary, self-employment activities, alimony received, interest or whatever (the net capital loss deduction limit is only $1,500 if you used married filing separate status). Any excess net capital loss is carried forward to 2010 and beyond and will generate future tax savings.

2. Take the Standard Deduction

If your total itemized deductions are usually close to the standard deduction amount each year, consider the strategy of bunching together expenditures for itemized deduction items every other year. Itemize in those years to deduct more than the standard deduction figure. Then claim the standard deduction in the intervening years. Over time, this drill can save hundreds or even thousands in taxes by significantly increasing your cumulative write-offs. Why?

Because you’ll bag higher itemized deductions in alternating years and relatively generous standarddeductions in the other years. Regardless of what happens with future tax rates, you’ll come out ahead. For 2009, the standard deduction is $11,400 for married joint-filing couples versus $5,700 for singles and $8,350 for heads of households. For 2010, the numbers remain the same — except the standard deduction for heads of households increases ever so slightly, to $8,400.

3. Give to Charities

Thanks to this year’s stock market rebound, you probably have some appreciated shares (currently worth more than you paid for them) that you’ve owned for over a year. If so, consider donating them to IRS-approved charities. You can generally claim an itemized charitable contribution deduction for the full market value at the time of the donation and avoid any capital gains tax hit. On the other hand, don’t donate loser stocks. Sell them, book the resulting capital loss, and give away the cash sales proceeds. That way, you can generally write off the full amount of the cash donation while keeping the tax-saving capital loss for yourself.

Warning: You must itemize deductions to gain any tax-saving benefit from these charitable donation ideas.

source: smartmoney.com - Year-End Tax Prep Strategies for Individuals

Every year, American taxpayers perform income tax preparation to file their federal income tax. Individuals and small businesses alike have income tax questions they can’t answer. The solution to this problem is to contact income tax attorneys, income tax lawyers, file online tax or hire an income tax service.

Which solution you choose is based on the complexity of your tax liabilities. Individuals without itemized deductions can use online tax software, an online tax service or do the online tax filing themself. Individuals who have itemized deductions may be better off served by consulting an income tax attorney, income tax lawyer or income tax service to get income tax questions and/or to complete the federal income tax forms.

For those who have unresolved tax disputes with the Internal Revenue Service, consulting with an income tax attorney obviously makes sense. The IRS has the right to withhold tax refunds, garnish wages and even liquidate personal assets to resolve federal income tax debts. Hiring income tax attorneys can be expensive but they specialize in the ability to arbitrate with the IRS . It is not uncommon to have an income tax attorney resolve the tax debt with the IRS at a discount. That tax debt discount is often agreed to be paid in installments instead of a lump sum payment.

Overall, individuals and small businesses are much better off hiring an income tax service or an income tax attorney than completing the forms via an online tax service because the income tax service and income tax attorneys are responsible for protecting their clients. Income tax attorneys and income tax services reputation is staked on the job they do.

Here are three tips you should know about when filing your 2008 income tax. It’s important that you are aware of them now so that you can take action before the 2008 tax year closes (Dec 31, 2008).

Standard Deductions vs. Itemized Deductions
One thing you should know about filing taxes is that it makes sense to compare your standard deductions against your Itemized Deductions.

If your Itemized Deductions exceed the amount of your itemized deductions, you stand a good chance of saving money by itemizing. If your Itemized deductions are slightly lower, try to shift some of your itemized deductions for the following year to the current year. Here is an example:

Let’s say you have the option to pay real estate tax in 2 installations, consider making the payment in 2008 that would normally be paid in the early part of 2009.

Another tip is to do the opposite, if you don’t think you will be able to take advantage of itemizing in 2008, try to shift some of them for the next tax year, This would work if you plan on purchasing a home in 2009 or you could make your annual charitable contributions in January, 2009 instead of December, 2008.

Flexible Spending Accounts
Now is the time to check if you have money left in your Flexible Spending Account. If you do have extra, make some appointments to use it up. If you don’t, you lose the money.

Medical Deductions
You can claim unreimbursed medical expenses that you incur over the year. IRS rules allow you to deduct them only if they exceed 7.5% of your Adjusted Gross Income. If you are close to that level, consider having elective or necessary medical procedures before the end of the year. But make sure to check that it’s among the qualifying deductible expenses.

Adjusted Gross Income (AGI) is a tax payer’s gross income (before taxes) and subtracting allowable IRS deductions. Here are some of the deductions to use when calculating your AGI:

• Certain business expenses of reservists, performing artists, and fee-basis government officials
• Health savings account deductions
• Certain moving expenses
• One-half of self-employment tax
• Penalties on early withdrawal of saving
• Alimony paid
• Deduction for contribution to an Individual Retirement Account (IRA)
• Student Loan interest deduction

But don’t confuse AGI with Itemized Deductions, such as home mortgage interest expense, medical expenses, property taxes, charitable contributions, among others.

Here is a simple calculator to estimate your Adjusted Gross Income