The clock is ticking on 2010, and so are tax breaks that could make a big difference on your bottom line.
The reality is that many will likely spend more time fussing over the holidays than their finances this month, but financial experts warn the tax scrooge will come if special tax breaks that are set to expire Dec. 31 aren't considered.
A good place to start is looking at your investments. Cash out winners at an historic 15 percent capitol gains. And if you cash out losers as well, you can erase your tax bill.
For example, if you sell a stock with a gain of $3,000, you'll pay about $450 in taxes. But sell a loser at a loss of $3,000 and your tax bill is zero. It's something to consider, even if Bush-era tax cuts are extended, said Eliopoulos.
If you are in the lowest tax bracket of 10-15 percent, this could be the last year you can cash in long-term capital gains tax-free.
Other money savers:
- There's a $2,500 tax credit for parents paying at least $4,000 in college tuition for college kids. Married couples making up to $160,000 a year are still eligible. For single parents, the income maximum is $80,000.
- Gift appreciated stock, not cash, to your favorite charity and you not only get the write-off, but you -- and the charity -- can save on the capital gains, too.
- Buy a house this month. Write a check for the points on your loan instead of putting it in the mortgage and you write off the entire amount for this year. On a $250,000 loan, that’s $2,500 in tax savings for one point.
- Make your home more energy efficient. This is the last month to qualify for a tax credit up to $500.
- Give gifts. Uncle Sam allows you to give any individual a $13,000 tax-free gift. It's a way to reduce your estate taxes to children and grandchildren.
- Seniors 70 ½ and older: take your minimum IRA distribution or face a 50 percent penalty.
- Do a Roth Conversion. Transfer retirement money from your Traditional IRA to a Roth IRA by Dec. 31 and you can spread out the tax bill over two years. It’s best to consult a financial expert on whether the move is right for you, as there are so many factors to consider.