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