There's no denying it. We're now ankle-deep in April. The snow is melting in the north. The cherry blossoms are blooming in the east. The nights are idyllic in the southwest. Oh, that and the April 15, 2008 filing deadline is now just a few sunsets away.
I'm going to convince myself that you have already sent in your 1040. Unless you're owing the government truckloads of money, there is little reason to hold off until the actual deadline, especially since next month's economic stimulus rebate checks won't be heading your way unless you have filed a timely return.
Since I called last week's column "Last Call for Tax Tips" I am not going to swing a new batch of last-minute suggestions to smooth over that 2007 return. That would be cheating, and you know what they say about cheating on your taxes. However, I still have taxes on my mind, so I may as well make this the first round of advice for those already looking ahead to their 2008 returns.
Here are two tips to get you thinking about how you can get an early start on making the most out of your tax situation well before April 15, 2009 springs out at you.
1. Master Your 2008 IRA, Now
A common piece of advice this time of year is to fund your 2007 IRA. If you qualify, you have until April 15, 2008 to make a tax-exempt or tax-deferred contribution to your IRA retirement plan.
That's solid advice, but did you know that now would be a great time to fund your IRA contribution for the 2008 tax year too? Of course. You could have done this since January, and the quicker you send in your annual investment, the longer that money has to grow in its tax-protected state.
There is also the welcome bonus of higher IRA contribution limits for 2008. Your 2007 IRA contribution was limited to a maximum of $4,000, or $5,000 if you are 50 or older. For 2008, the limits get bumped up to $5,000 and $6,000 respectively.
2. Brush Up On Last Year's Tax Changes
Tax code changes spring up on consumers, often when it's too late. How many of you knew that you could now deduct the mortgage insurance that many new homeowners have to pay when they don't have enough equity in their loans? Did you know that cash donations are no longer deductivble unless you have a bank record of the transaction?
Yes, the tax code is a perpetually evolving beast. The earlier you brush up on any nuances and limitations, the easier it will be to plan accordingly. Just as homeowners can time their mortgage payments to wedge an extra payment into a particular year or lump health expenses together in a particular year to qualify for a deduction, it is better to start planning today than reflect on your 2008 return once 2009 rolls around.
By then, many of the tax breaks and liability-shaving moves may no longer be available to you.
I may have been simply teasing you if you truly haven't finished your tax return for the 2007 year, but I'm dead serious about the importance of strategizing to make the most of your 2008 tax year today.
Rick Munarriz is a personal finance columnist for HispanicBusiness.com. He has written for sites such as The Motley Fool and Citysearch and has appeared on NPR, TechTV, Sirius Satellite Radio, and CNN en Espaņol. He can be reached through http://www.Reportedly.com where he discusses his latest articles.
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