I am often asked what are the best ways to save money on a tax return? That answer depends on some many different parameters, including: do you own a home, do you have children, do you own securities, a second home, are you self employed, do you use childcare, are you filing separately or joint and, of course, how many money do you earn each year. And the list goes on and on.  My best recommendation is if you think your tax situation is too complicated, see a tax pro and get advice now!

Here are some simple tips for reducing your tax burden – and now is the time to act.  Why? Because the end of the year is less than two months away.

Okay, here goes…

IRA, SIMPLE IRA or SEP
One way to lower your taxable income for the year is to open or contribute to your IRA. Put in as much money as you can afford, up to the maximum deduction.

You can contribute to your 401(k), 403(b), deductible IRA, SIMPLE IRA or SEP. You could have made contributions for your 401(k)s and 403(b)s until up until Dec. 31, 2008. But you have until April 15, 2009 to make a contribution to an IRA.

Charitable Donations
Donating money to charities before the end of the year will count as a deduction in 2008.  You can include any  contributions charged to your credit card, even if you don’t pay it until 2009.  For any cash contributions, also ask for a receipt or use a check.

If you donate property, you can deduct the fair market value. There isn’t an exact calculation. When trying to come with an estimate, consider how much it would sell for at a garage sale (unless it’s an antique).

Stock Sales
2008 will be a year where many of us will take a hit on our stock portfolios. If you need the cash, you might consider selling the stock in 2008 and take the loss.  But talk to your tax consultant before taking this measure.  You need to consider the short term or long term ramifications of such an action.

Remember however, if you do sell stock to generate a loss, you are prohibited from purchasing substantially identical stock within the period beginning 30 days before and ending 30 days after the sale that generated the loss.