Tax Saving Tips

If you are looking to shelter yourself from this tax, then your strategy should be to accelerate your income and defer deductions you may have taken.

Some of the ways you can accelerate income include:

* Withdrawing money from a taxable IRA or 401k plan.
* Cashing in any US Savings bonds - Series EE - that you may be holding.
* Taking a short-term capital gain on a stock position you are holding.
* Switching from tax-free bond holdings to taxable bonds.
* Closing out a certificate of deposit to take the interest income gain.

If you are running a business, you can defer deductions by depreciating capital expenditures such as the purchase of office equipment instead of expensing the cost in the current year.

Finally, you can delay the payment of certain deductible items to reduce the risk of paying the alternative minimum tax. For example, in December 2008 you may have prepaid real estate taxes that are due in January 2009. This strategy allows you to take the tax deduction in 2008, which lowers your tax liability, but may trigger a minimum tax. You can also apply this same strategy to medical expenses and un-reimbursed business expenses.