Year-end tax tips

Here are 6 steps you or your tax adviser should explore.

Tax moves you make right now could lower your federal income tax bill and save you money. But act before the end of the year so you don't miss out. Pay attention to these points:

For more details, visit irs.gov.

Withholdings. Use the withholdings calculator at irs.gov to make sure that you aren't having too much money taken out of your paycheck, then inform your employer of any change. "Every year, about 80% of taxpayers get a refund, and it averages over $2,300," says Nancy Mathis of IRS. "So that's a little bit of a cushion you can use now."

0% capital gains. Capital gains and qualified dividends are tax-free for those in the 10% or 15% tax brackets. You might actually have gains in some long-term holdings, despite the stock market slide. If you are in a higher tax bracket, one tactic is to transfer appreciated assets to older parents, but only if they're in the 10% or 15% tax brackets, says tax analyst Mark Luscombe of CCH. "Then, they can sell them and qualify for the 0% rate."

Car breaks. If you buy a new car, truck or van exclusively for business driving, you can claim a "bonus depreciation" deduction of up to $11,160 on your 2008 return. Also, there are still many tax breaks for hybrid vehicles, but Honda's expires Dec. 31.

Standard deduction for real estate taxes. If you don't itemize deductions, you can claim up to a $500 deduction for property taxes ($1,000 for joint filers) this year and next. If you're planning any deductible expenses, wait until 2009 to pay for them. "That way, you can claim the bigger standard deduction in 2008 and have extra deductions to itemize next year," says senior tax analyst Bob D. Scharin of Thomson Reuters.

IRA charitable contributions. If you are 70 1/2 or older, you can make withdrawals, tax-free up to $100,000 a year, from your IRA if you give the money directly to a charity. Even though you won't get a charitable deduction, this reduces your adjusted gross income so you might qualify for other breaks.