"It's a shame that so many people forget about their taxes until April 15," said Justin Ransome, a partner in Grant Thornton's National Tax Office. "Just a little bit of planning in November or December can often go a long way in April."

1. Accelerate deductions and defer income. Why pay tax now when you can pay tomorrow? Deferring taxes is a traditional cornerstone of good tax planning. Generally you want to accelerate deductions into this year and defer income into next year. You may be able to control the timing of consulting or self-employment income and retirement distributions. Deductible expenses you may be able to accelerate include state and local income taxes, property taxes and mortgage interest. But be careful, because many of these won't be deductible if you have to pay the alternative minimum tax (AMT). High-income taxpayers should also consider the possibility that tax rates could increase in 2009, which could make accelerating income into 2008 and deferring deductions a better strategy.
2. Maximize "above-the-line" deductions. Above-the-line deductions are valuable because you deduct them before you calculate your adjusted gross income (AGI). They are allowed in full and make it less likely your other tax benefits will be limited. Common above-the-line deductions include traditional Individual Retirement Account (IRA) and Health Savings Account (HSA) contributions, moving expenses, self-employed health insurance costs and alimony payments.
3. Consider charitable contributions carefully. Think about giving appreciated property to charity so you can deduct the full value without paying capital gains taxes. But don't donate depreciated property. Sell it first and give the proceeds to charity so you can take the capital loss and a charitable deduction. If you're 70½ or older, consider using a provision that allows you to make your charitable donations directly from any IRA distributions so the gift will reduce AGI. And as always, double-check the limits and substantiation rules before making any contributions because they've changed in the past few years. You can't deduct your time for donating services, only your out-of-pocket expenses.
4. Prepare to use the low capital gains and dividends rates wisely. Remember that the 15 percent tax rate on long-term capital gains and qualified dividends is scheduled to increase after 2010. President-elect Barack Obama has even proposed increasing this rate sooner for high-income taxpayers. Many factors must be considered before deciding when to recognize capital gains, but the risk that rates could go up should not be ignored. If you recognize capital gains, don't forget the AMT. Capital gains are nominally taxed at 15 percent under the AMT, but you'll effectively pay 21.5 percent on any gains that are counted when determining the phaseout of the AMT exemption.
5. Leverage retirement account tax savings. It's not too late to maximize contributions to your retirement accounts. If your employer offers a traditional 401(k) or Roth 401(k), use it. The contribution limits for both accounts in 2008 are $15,500 ($20,500 for those 50 and older). Contributions to a traditional 401(k) are excluded from taxable income, and you don't pay taxes until you take money out at retirement. Roth 401(k) contributions aren't excluded from income, but the money earned in the accounts will never be taxed if distributions are made properly. Traditional IRAs share the tax benefits of traditional 401(k)s, while Roth IRAs share those of Roth 401(k)s. However, IRA accounts are established outside of your employer, and there are AGI-based limits on contributions. Contributions for 2008 to IRA accounts can also be made through April 15, 2009. And don't forget that the $100,000 AGI limitation for converting IRAs and qualified retirement plans to Roth IRAs will be eliminated in 2010, so start planning now to pay tax on the conversion if you want to benefit.
6. Jump-start a 529 plan for education. Think about using a 529 plan to save for future college expenses now that the tax advantages of the plans are permanent. Contributions are made after tax, but distributions from 529 plans are tax-free if used to pay qualified higher education expenses. You may elect to treat a current-year contribution to a 529 plan as having been spread over five years for gift tax purposes and make a current year contribution of up to $60,000 per donee without gift tax consequences.
7. Don't forget to use annual gift tax exclusion. If you may eventually have to pay estate taxes, consider establishing a gifting program for your children and grandchildren to take advantage of the annual gift tax exclusion. Gifts of up to $12,000 per donee ($24,000 for married couples) are generally excluded from gift tax in 2008 and will be removed from your estate, with no limit on the number of donees. In 2009, the gift tax exclusion will be $13,000.
8. Watch out for the "kiddie tax." The "kiddie tax," which requires a portion of a child's unearned income to be taxed at the parents' marginal rate, has been expanded to apply to full-time students under the age of 24 whose earned income does not represent at least one-half of their support. Be careful transferring income producing assets to your kids.
9. Perform an overall financial checkup. The end of the year is always a good time to assess your current financial situation and plan for your future. You should think about cash flow, health care, retirement, investment and estate planning. Check wills, powers of attorney and health care proxies for changes that may have occurred during the year. Use the open enrollment period to reconsider employer-sponsored programs that could reduce next year's taxable income. HSAs and flexible spending accounts for dependent care or medical expenses allow you to use pre-tax dollars. Remember, it's never too early or too late to start planning for the future!
10. If Congress offers help, take it. Congress may not be done for the year and could enact more tax relief before year-end to address the current economic downturn. They could consider making certain retirement plan withdrawals penalty-free, taxing withdrawals at a lower rate, suspending minimum withdrawal requirements or even allowing more than $3,000 in capital losses to offset ordinary income. This relief will most likely be temporary, so don't fail to take advantage of it if you can.