By the time this article is published, you'll have approximately 12 business days to finalize your end-of-year tax strategies. I say "approximately," as the holidays will cut into those days and will slow mail delivery as well. Like the 12 business days before Christmas, we listed 12 ideas below to help you save on your taxes for 2005:

1. If you helped Katrina, Rita, or Wilma victims this year, you could receive a number of tax breaks. For instance, if you housed hurricane victims for at least 60 days, you could receive $500 per person up to a $2000 ceiling. If you donated to a recognized charity and you itemize your returns, don't forget to list those gifts on your deductions. More importantly, if you were affected by any one of these hurricanes, the IRS provides special remedies for each situation. Be sure to read the instructions carefully, as each hurricane situation applies to specific areas.
   
   
2. On November 7th, the Treasury Dept. and the IRS released a regulation which will allow "most common individual and business returns" (not corporate filings) to use a single IRS form (Form 4868) to get an automatic six-month extension of time to file. This process eliminates the previous two-step process previously required to file extensions. If necessary, you can take advantage of this opportunity to delay tax payments beginning 1 Jan 2006, and you don't need to offer any rhyme or reason why you've made this decision to the IRS.
   
   
3. We know that - at the moment - we don't need to claim stock dividends as income on our tax forms. Don't forget those dividends which are automatically reinvested into your portfolio. For instance, say that you invest $1,000 into a stock and your dividends add another $250 to that stock's value. If you sell the stock for $2,500, then you need to deduct both your investment and the dividend, which will leave you with a $1,250 capital gain (2,500-1,000-250=1,250) rather than a $1,500 capital gain (2,500-1,000=1,500).
   
   
4. Remember to add brokerage fees, commissions, transfer fees, and any other expenses incurred during your trading from the sale price of any stock you sell during the year. These costs are direct expenses that affect your profit, and they are viable deductions.
   
   
5. The IRS will be the first among many to remind us that - generally - realized capital losses are first offset against realized capital gains. In other words, use those stock losses to put a dent in some taxable profits this year if you need them, as excess losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately). Losses in excess of this limit can be carried forward to "later years," but check carefully for time frames and limitations.
   
   
6. If you worked from home this year to help save an employer some money, then a home office deduction is allowable, feasible, and usually a cakewalk (as long as you don't rent your space to your employer). If, however, you conduct a small private business from home or if you are self-employed, the IRS may scrutinize every square foot you claim for business. If you feel that a home office tax deduction isn't worth the hassle, however, you may miss out on some monetary compensation. Follow the IRS home office deduction guidelines to the letter to qualify. Additionally, don't forget to deduct office supplies.
   
   
7. If you spent time in hotels on business this year, whether for an employer or as a self-employed person, don't forget that these trips are valid expenses that can be deducted within specified limits. Also, deductions are affected by area of travel, as the IRS determines business travel by where you live as well as by where your tax base is located.
   
   
8. For those who are self-employed, you can defer income into next year simply by waiting until January to send December bills to customers. Your customers may not appreciate this tactic if they plan to deduct payments to you on their taxes...but you might save big if you find that your profitable income (capital gain) increases during the end of the year.
   
   
9. Review your retirement plan contributions. If you don't know how much you've contributed this year to date, take a look at your last pay stub. The limitation to $14,000 (for those under age 50) affects elective deferrals to section 401(k) plans and to the Federal Government's Thrift Savings Plan, among other plans. This limitation will change to $15,000 for 2006. Make sure that these changes are reflected in your deductions for maximum tax benefits.
   
   
10. Check last year's return to see if you are receiving too much money. While some people believe that a large return is a windfall, others know that they might be loaning the IRS your cash in an interest-free loan instead. Instead of a large return, you could receive that return in smaller sums with each paycheck - a gift if you need cash now. You can change your withholding status and/or increase your withholding allowances to reduce your tax withholding, and often this can take effect immediately. Complete a new W-4 form at your employer's payroll office to accomplish this task.
    
    
11. If you can't pay that school loan, and if you've filed for a deferment because of lack of fund or because of unemployment (two different situations, according to the government), then try to at least pay the interest on that loan, as those payments are tax deductible.
    
    
12. This time of year, most folks think about gifts. Don't give cash or something that might break. Instead, give children shares of appreciated stock. When they sell the shares the gains could be taxed at lower capital gains rate as compared to the parent's higher rate. And, you can give any individual up to $11,000 in 2005 and the gift will be excluded from the U.S. Gift Tax and it will be received tax-free by the recipient.

Until Next Week,
Linda Goin