The 2008 filing season officially begins January 14th and with little more than 3 months remaining before your taxes are due, now is an ideal time to start executing those valuable year-end tax strategies that will help minimize or defer your tax liability. With the start of a new year, and of course the 2008 filing season, resolve to not delay preparing your taxes any longer. Preparing now will save you time and energy, and perhaps even money, later. Here are some fundamental, yet simple, ways to hit the ground running and be in the best position to sail through the 2008 filing season.

1. Determine how you'll prepare your taxes

First, it is important to determine whether you plan to do your taxes yourself this year or, alternatively, employ the services of a certified public accountant or other tax professional to do the math for you. If you're planning to do your taxes yourself this year, determine whether you will go the old fashioned pen and paper route or use a software program. On-line tax preparation software allows you to prepare and file your taxes over the internet.

If you intend to tackle your taxes on your own, remember to obtain all the necessary tax forms, publications and schedules you need (and carefully read the instructions to this year's forms, as well as the forms themselves). Forms and publications are accessible on the IRS's website at www.irs.gov. And, if you're doing your taxes by yourself, set a definite deadline by which to submit your tax return.

2. Gather and organize your records and receipts

Organization is critical, whether you're preparing your return yourself or going to a return preparer. Gather and organize your supporting financial documents, records, receipts, cancelled checks, logs and other paperwork that are necessary for you to prepare your 2007 income tax return. This is imperative if you want to hit the ground running; implementing your year-end tax strategies starts with assembling and organizing your tax-related documents necessary to complete your return.

Consider labeling folders or envelopes in which to hold your supporting documents, receipts, records, etc., by tax-related category, such as: medical expenses, child care, moving expenses, charitable donations, state and local income tax statements, travel. Organization and substantiation is critical for supporting your tax position. Considerable tax dollars can be lost because of poor recordkeeping.

Some important documents and records that are important, depending on your circumstances, include the following:

• W-2s
• Schedule(s) K-1 from partnership income (Form 1065)
• 1099s (such as 1099s for interest income, dividend income, proceeds from stock and bond sales, income from state or local governments, unemployment income, and payments from IRAs and retirement accounts)
• Dividend and interest statements (Forms 1099-DIV and 1099-INT)
• Brokerage statements showing stock or bond sales (Form 1099-B)
• Retirement distributions (Form 1099-R for payments from IRA or other retirement plans)
• Unemployment income (Form 1099-G or unemployment check stubs or deposit records)
• Income and expense statements for rental property
• Receipts and cancelled checks (keep only receipts that will substantiate your deductible expenses and taxable income)
• Medical and dental expenses
• Bank statements
• Childcare, daycare or adultcare expenses
• Tuition bills and statements
• State and local income tax statements
• Records of quarterly estimated tax payments

Note. Forms 1099 are provided by your financial institution or brokerage house typically around the same time that employers send out Forms W-2. By law, employers must send W-2s prior to January 31. If you have not received your Form 1099 you should request it from your investment company or financial institution.

Comment. If you made a charitable donation in 2007, whether it was food, clothing, money, or even a vehicle, and you're ready to deduct it on your 2007 tax return, you must comply with strict new substantiation requirements. You won't be able to take a deduction for your 2007 charitable contribution unless you've maintained records of the gift. A bank statement, receipt or written communication from the charity provides proper documentation.

3. Review last year's return

It's very important to look at last year's return, not only to learn from mistakes you may have made in the past, but to be reminded of alternative sources of income that you may have neglected or forgotten. Last year's return provides a record of the prior year's taxable transactions that may help you better understand, or serve as a helpful reminder, of this year's taxable transactions.

4. Assess potential deductions

With your records gathered and organized, now you have the ability to gain a clearer picture of whether it's better for you to take the standard deduction or itemize your deductions. Estimate your itemized deductions and compare it to the standard deduction applicable to your filing status to see which provides you with the most beneficial tax deduction: Single: $5,350; Head of Household: $7,850; Married Filing Jointly/Surviving Spouse: $10,700; Married Filing Separately: $5,350.

The following expenses can be taken as itemized deductions (look to see if these apply to you and do the math):

• Medical and dental expenses (that you pay for yourself, your spouse, your dependents are deductible to the extent the total exceeds 7.5% of your adjusted gross income and weren't paid or reimbursed by insurance or another source)
• State and local income taxes or state and local sales tax
• State, local, or foreign real estate taxes
• Charitable contributions
• Mortgage and investment interest
• Nonbusiness casualty and theft losses
• Miscellaneous itemized deductions (most miscellaneous itemized deductions can only be deducted to the extent they exceed 2% of your adjusted gross income). Your unreimbursed employee expenses are miscellaneous itemized deductions.

5. Don't forget valuable credits

Certain popular, but temporary, tax breaks may help reduce your 2007 tax bill. Credits are generally more valuable than deductions because they reduce your taxes dollar for dollar; deductions on the other hand reduce your taxable income. A tax credit is subtracted directly from the total amount of federal tax owed, therefore reducing (or even eliminating) your tax obligation. These are some of the available credits that you should be looking at to see if they may help reduce your tax bill:

• State and local sales tax deduction
• Mortgage insurance premiums deduction
• Tuition and fees deduction
• Educator deduction
• Residential energy property credit
• Earned income tax credit
• Alternative motor vehicle credit
• Child and dependent care credit
• Adoption credit

6. Talk with a tax professional

Tax law is complex and constantly changing. You may want to hire a certified public accountant (CPA) or other tax professional familiar with the tax laws and issues that you may be dealing with this filing season. Hiring a professional is particularly important if you have a complicated financial and tax situation, or you think you will face an especially large tax bill this year. For example, an accountant or other tax professional can help maximize your deductions or determine your eligibility for various tax credits. Moreover, you can take an itemized deduction for amounts that you paid a tax professional to prepare your return.

If you need help preparing for the 2008 filing season, please contact our office to schedule an appointment today.