Tax Tips for 2009

Dec. 17, 2009 — -- As the year comes to a close, tax experts and financial planners are encouraging Americans to start sorting out more than just where to ring in 2010.

CPAs and other financial experts say now is the time to get your finances straight to lessen your tax burden before the New Year rolls around.

That's especially true for the rising tide of unemployed in America for whom tax time often can be frustrating and confusing.

In the past three months alone, job losses averaged 135,000 a month, according to the Labor Department. Since the recession began in December 2007, more than 7 million jobs have been lost and the unemployment rate has doubled.

"You're seeing a trend where more people have shifted from being full-time employees to part-time of freelancers," says Adam Gottlieb, a certified public accountant with Martin Cohen CPA, a Manhattan firm that offers accounting, tax and small business consulting services. "That's a direct result of this economy."

The IRS issues year-end tax tips on its Web site each year to help Americans better understand new tax codes and filing restrictions. And CPA's from Boston to San Francisco are fielding questions from clients who are hoping smart financial moves now will allow them to reap benefits later.

Financial planners recommend reviewing your income, expenses and potential deductions before the year ends. A close look at how much you are earning, spending and saving will help better determine which deductions to pursue, say experts.

If you're in a higher tax bracket, where higher capital gains can be expected, financial advisers say you should closely review your investment portfolio to consider if taking a loss will help offset higher capital gains.

"Take a hard look at your portfolio," says Gottlieb. "You may need to sell off losing stocks or mutual funds now in order to offset any realized gains you've received from investments this year."

Deferring income until after the first of the year also can be a smart option for people not expecting to earn higher income next year. That way, you are taxed at a lower rate for 2009.

There also are tips for the rising numbers of self-employed people. Some advisors recommend issuing year-end invoices late in December in order to make it more likely that you will receive payment in January.