This Congress will go down in history for stalemates and delays, diversion tactics and more. And, the worst part is that you and I - the taxpayers - will be affected from the fallout of this "do nothing" stalemate. For instance, lawmakers were to pass a temporary fix to the Alternative Minimum Tax (AMT) to prevent certain taxpayers from having to pay the so-called wealth tax. In October, the IRS warned that if Congress does not act by early November, up to 50 million taxpayers could see serious delays in the processing of their returns and their refunds when they file their 2007 taxes. Well, it's late November, and nothing has been done.

But, you can be more productive that Washington lawmakers this next month, with a focus on reducing your 2007 tax bill. Unlike Congress, you need to act now, as if you miss the end of December deadline on the items listed below, you won't have another chance to redeem them for this year:

1. Cut Capital Gains: Do you have a stock or two that nauseates you at this point because of the losses? Look closely at the company to remember why you purchased the stock in the first place. If those reasons still ring solid, leave the stock alone. But, if you've found a more promising investment, you might think about cutting your losses to offset capital gains. Your losses can offset 100 percent of your capital gains plus up to another $3,000 in ordinary income. If you have losses beyond this, you can carry them forward to use on future tax returns. But - you can't cut those losses if you reinvest in the same stock or fund within 30 days before or after you sell that same stock or fund.
   
   
2. Open That Savings/Retirement Account: You have until the last day in December to make a 2007 tax-deferred contribution to your 401k. This contribution will reduce your adjustable gross income and your tax bill. Contribute up to $15,500 this year, or $20,500 if you're age 50 or older. Other savings - like deductible IRAs - will allow you to contribute up to $4,000 for 2007 as late as 15 April 2008. But, if you don't have an IRA, you need to open it before 31 December or you'll be forced to forgo this deduction until next year.
   
   
3. Self-Employed or Business Owner Deductions: Similarly, if you're self-employed and want to open a profit-sharing Keogh plan or a single 401k or Simplified Employee Pension (SEP) IRA, you must open the plan by 31 December. However, you have until tax day or later (depending upon your tax return due date) to contribute for 2007. Additionally, check now for advertising and office supply needs so you can purchase these business items for 2007 deductions.
   
   
4. Refuse Income: Take a long hard look at your tax bracket to determine if you need any more income this month. It may help to reduce your tax payments if you postpone some income until 2008. The reason you may want to defer this income is because the income ranges that apply to each tax bracket ratchet up with inflation each year, so more of your 2008 income will be taxed at lower rates next year. Don't try to pull the trick where you deposit a 2007 check in 2008, as that 2007 check will still count as 2007 income.
   
   
5. Take Income: If you have a good chance of falling into the 10 or 15 percent tax bracket next year, it may pay to take some income this year - especially if you plan to sell appreciated investments. If you sell in December this year, you'll benefit from a 0 percent capital gains and dividend rate for 2008.
   
   
6. Watch the Kiddie Tax: Currently, the Kiddie Tax still applies to kids under age 18; however, next year the tax will apply to those under age 19 or to fulltime students under age 24 who don't earn enough to pay for half their support. This means that they might sell some of their appreciated assets now if they have them, so that they can enjoy the current fiver percent capital gains and dividend rate. If they wait until 2008, they'll be subject to the Kiddie Tax and a portion of their gains and dividends may be subject to your tax rate. Of course, they can always hold onto their assets until after college and they'll enjoy a lower tax rate no matter what.
   
   
7. Go Green: Two key energy credits are scheduled to expire at the end of December, and they equate to a dollar-for-dollar reduction of your tax bill. So, before the end of the month, you might want to install insulation, windows, doors, or central air conditioning that meets certain energy conservation standards for a $500 credit. And, you can also take a credit up to $2,000 if you install a solar-powered hot water system or solar photovoltaic panels.
   
   
8. Homeowners Treat: If your final 2007 property tax bill is due in January, why not pay for it in 2007? That payment will add to your 2007 deductions, unless, of course, you're subject to the ATM mentioned at the beginning of this article.
   
   
9. Deductions for Everyone: Make an extra school loan or mortgage payment this year and deduct the extra interest. Also, don't forget to make payments on other deductions such as donations, and medical procedures or medications (but only if those medical costs will exceed 7.5 percent of your adjustable gross income).

You've got the idea?so get on it already. December will be gone before you know it!

Until Next Week,
Linda Goin