Tax to the Future

SO YOU'VE JUST sent Uncle Sam his check. Guess what? You're hardly alone: Every year 20 million Americans wait until the first two weeks of April to file. And procrastination can be costly, with one study estimating that $3.6 billion in deductions were overlooked last year. For an early start on next year, some tips.

Beat the stealth tax

There are so-called stealth taxes that limit the dollar amount of your itemized deductions if your income passes certain thresholds ($239,950 for joint filers; $159,950 for singles). But a break introduced in 2006 — tax geeks call it "the phase-out of the phase-out" — could let you recoup two-thirds of the loss. Use tax software or consult a tax professional to see if you're eligible — the provisions are complex.

Lose now, gain later

If any of your investments in the past year have taken a hit, consider selling them. Harvesting those short-term losses now can offset future capital gains from other investments, reducing your taxable income or perhaps shielding it from triggering the dreaded alternative minimum tax. "It's a good bet," says Ian Weinberg, a New York-based certified financial planner. "I don't see any losses with it."

Know your deductions

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With the Hope education credit, some parents can deduct up to $1,800 for a child in college, up from $1,650 in 2007. The IRS "is the motherboard for this kind of information," says Daniel Wishnatsky, a financial planner in Phoenix. But navigating its site requires patience. The Joint Committee on Taxation offers concise lists of "extenders" that will tell you, for instance, that the motor-vehicle credit for qualified hybrids will expire in December 2010.

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