Time running short for 2007 tax moves

San Diego — The Internal Revenue Service reminds taxpayers they have less than four weeks left to make their final financial moves for the 2007 tax year.

Taxpayers can take the first step towards tax planning by reviewing tax law changes and their situation. A little advance planning now could save taxpayers time – and perhaps even money – later. Ten key points to consider:

• Charitable Contributions – Make 2007 deductible charitable contributions no later than Dec. 31. Due to recent law changes, cash donations are not deductible unless you have proper written proof. Also, donations of used items such as clothing and furniture are no longer deductible unless they are in “good” condition. Donations charged to a credit card by Dec. 31 are deductible for 2007 even though the bill is paid in 2008.

• Tap IRA for Charity – Taxpayers at least 70 ½ years old, can make a tax-free transfer of up to $100,000 directly from an IRA to a tax-exempt charity by Dec. 31 without any tax consequence(s). Unless Congress acts, this law is set to expire after 2007.

• Contribute to a Retirement Account – The maximum IRA contribution for the 2007 tax year is $5,000. The Retirement Savings Contribution Credit or “Saver’s Credit” of up to $2,000 is also available to taxpayers who contribute to a plan and whose income is generally less than $52,000. A Roth IRA conversion from a traditional IRA may also be a tax saving solution. Many can deduct a traditional IRA contribution as well.

• Go Green - Taxpayers who make energy-related improvements to their homes in 2007, such as replacement windows or doors, insulation or energy-efficient heating or cooling equipment, may be eligible for Energy Tax Credits. The maximum credit available for all years is $500. Save receipts! Original buyers of qualified hybrid vehicles are eligible for hundreds, if not thousands in tax credits depending on make and model.

• Sell the Losers – Consider a portfolio adjustment. Up to $3,000 can be deducted in capital losses each year.

• Scam Alert – The IRS never initiates contact with taxpayers through email nor will it ask for personal, intrusive financial information. “Phishing” scams are pervasive and come in many forms, don’t be taken!

• Your Home –Eligible taxpayers can deduct costs associated with their loans such as points and home mortgage interest. Those who sell their principal home/residence after living in it for two of five years may exclude from tax up to $500,000 in capital gains from its sale. Property Mortgage Insurance is deductible in 2007 only—unless congress acts to renew. More on the tax implications of foreclosure is on the IRS Web site.

• Common Deductions – In the education arena, full-time Teachers can deduct up to $250 for out-of-pocket expenses, qualifying parents can deduct up to $4,000 for tuition and fees. Medical and Dental expenses are deductible and sales tax (in lieu of state income tax) can be deducted in 2007 for those who itemize.

• Business Deductions – Some business taxpayers may benefit by buying and placing an asset into service before year’s end. Others will see relief from using the home office deduction. A wide variety of other moves for business can be made as well. Find more under Businesses at irs.gov.

• Save Receipts and Paperwork – There’s no good substitute for a reminder than accurate recordkeeping.

For more year-end information and to access IRS forms and publications, go to the IRS Web site at http://www.irs.gov.