What you can DO:

• Hybrid Cars. This credit is worth up to $3,400 and only applies to the first 60,000 hybrid cars sold per manufacturer and will be reduced and phased-out after the quota has been meet. Taxpayers have to be the original owners. If you lease you don’t get the credit the leasing company does.
• Prepaying or Postponing Itemized Expenses. Before the end of the year, check your records for payments of deductible itemized expenses. For example, at the end of 2007, you may make an additional charitable contribution, or pay a state or local tax bill not due until 2008, or extend by one-year professional association dues or job-related subscriptions. However, you cannot deduct prepayments of interest, insurance premiums, or rent on investment property.

For The Self-Employed

• December 31 deadline to set up Keogh plan. If you are self-employed and want to make deductible contributions for 2007 to a Keogh plan, the plan must be formally adopted by December 31, 2007, if you report on a calendar-year basis. If it is, you have until the filing due date of April 15, 2008, plus extensions, to make a deductible contribution for 2005. If you do not set up a Keogh by the end of the year, you can make a deductible contribution.

Shifting income and deductions to impact your 1040.

Higher income in 2007? If you your income increase significantly in 2007, you may want to accelerate the payment of deductible expenses such as charitable contributions and subscriptions for professional/business journals and, if possible, defer income to 2008.

Lower income in 2007? If your tax bracket will be lower in 2007 than it will be in 2008, which might be the case if the cause of the decrease is unlikely to be repeated, deferring deductions to 2008 would be advisable. Assuming the expected increase in income would be enough to shift you to a higher bracket, any income you could accelerate to 2007 would be taxed at a lower rate, and deductions accelerated to 2008 would provide a greater tax reduction.

BE CAREFUL

• ALL Cash Donations Must be Substantiated- Beginning in 2007, all cash donations, regardless of amount, must be substantiated by canceled check, bank record, or detailed receipt from the charity. Use a credit card to make a gift and you'll have an automatic receipt. Also, if you use a credit card the donation is complete. A check that doesn't clear until after the year won't be a deductible donation for 2007.
• Wash-sale Loss Rules. If you are an investor or trader (not a dealer), your loss on a sale of securities can be disallowed under the wash-sale rule if you buy substantially identical securities within the 30 days before the date of sale and the 30 days after the date of sale. The loss disallowance rule applies even though the 61-day period starts in 2007 but ends in 2008. If you sell at a loss and your spouse buys substantially identical stock within this period, the loss is also barred Remember!! LAST DAY TO TRADE IS 12/31/07.
• No Way Around the Alternative Minimum Tax (AMT). Because it is essentially a flat tax normal tax-planning advice can make you more vulnerable to the AMT. Accelerating deductions, like prepaying state and local income taxes, won’t reduce your income for AMT. Don’t shift deductions where they won’t do any good. For more on what can work for you, against you, and how to do better this year, see J.K.Lasser’s Your Income Tax 2008 and the Supplement at www.jklasser.com .

For further information, to request a review copy of J.K. Lasser’s Your Income Tax 2008 or to schedule an interview with a J.K. Lasser spokesperson -- Donna LeValley-Cocovinis, Esq. Or Barbara Weltman, Esq.-- please contact:

Nancy Colson
Managing Director
The Alternative: Media Placement Specialists 212-246-1580/ ncolson@nyc.rr.com