It’s not too late to take advantage of some opportunities to reduce your 2008 income tax bill.

For example, a new federal law establishes a tax credit of up to $7,500 for first-time homebuyers. The credit must be repaid over a 15-year period, functioning like a no-interest loan for those who qualify.“It is a nice way to get a little extra boost when you first purchase your home,” Stell said Monday.

Under the Housing and Economic Recovery Tax Act of 2008, the home must be purchased after April 8 of this year and before July 1, 2009. Homes bought after Dec. 31 would be eligible for the tax credit next year.

A homebuyer is considered a first-timer if he or she has not owned a principal residence for three years.
The credit is equal to 10 percent of a home’s purchase price, capped at $7,500.
For taxpayers earning more than $75,000, or $150,000 on a joint return, the credit is less.

The end of this turbulent economic year might also be a good time to think about selling some losing stocks, because such losses can offset capital gains that may have occurred before the economy headed south in recent months.  If there is a net capital loss, up to $3,000 of that offsets anything on the tax return, it can offset ordinary income, such as wages or salary. The rest is carried over to the following year.

Other last-minute tax-saving ideas:
For taxpayers who do not itemize, take advantage of an additional standard deduction for property taxes, up to $500 or $1,000 on a joint return. As of now, the deduction is available only for 2008 and 2009.

Buy a hybrid vehicle. More than 50 models through the 2009 model year qualify for an alternative motor vehicle tax credit of up to $3,000, if bought new by an original purchaser this year.

Donate to qualified charitable organizations. The fair market value of property you give to a qualified organization is generally tax-deductible for those who itemize. The IRS Web site has a “Charities and Nonprofits” link where taxpayers can search to see if a particular group qualifies. A tip: If an organization accepts donations by credit card, taxpayers can charge a contribution in 2008, but postpone paying for it until next year.

The Hope (up to $1,800 per student) and Lifetime Learning (up to $2,000 per return) education credits help offset tuition costs for those whose modified adjusted gross income is less than $58,000 or $116,000 on joint returns. Both credits are generally allowed for qualified expenses for academic periods in 2008 or during the first three months of 2009, which could make prepaying tuition a good idea. The reinstated higher-education tuition deduction, up to $4,000, covers the same time periods.

Open or contribute to a traditional IRA, for a tax deduction of up to $5,000, or $6,000 for taxpayers 50 years of age or older. Stell said the amount of the deduction may be less if an individual is covered by an employer retirement plan or if income exceeds $63,000 ($105,000 on joint returns or $10,000 if married filing separately). IRA contributions can result in a deduction for 2008 even if made next year, as long as they are made no later than April 15, 2009.

In addition, a saver’s credit helps offset part of the first $2,000 that employees contribute to IRAs, 401(k)s and other workplace retirement plans. Relevant income levels for the saver’s credit are as follows: married filing jointly, up to $53,000; single or married filing separately, $26,500; head of household, $39,750.

Congress has also reinstated a deduction of up to $250 in expenses for books and classroom supplies paid by eligible educators.