You can do certain things now to make filing taxes easier

ByABC News
December 11, 2008, 9:48 PM

— -- The stockings have been hung by the chimney with care. The presents have been wrapped. You've even ordered your Christmas goose. Is there anything left to do before you pour yourself a cozy drink and start celebrating the season?

Of course! Put down that eggnog and tackle your year-end taxes. Because while you can get away with sneaking some holiday cards in the mail after Dec. 31, the IRS is a stickler for the calendar. Some year-end tips:

Cut your losses

Sure, you know you're supposed to buy low, sell high. But let's get real. If you own a stock or mutual fund that fell 50% this year, you'll need to earn 100% just to break even. By the time that happens, you could be really old.

Another option: Sell the losers in your taxable portfolio by Dec. 31 and use the losses to reduce your 2008 taxes.

If you sold securities at a profit this year high fives all around you must first use your losses to offset your capital gains. If you still have losses left after you've offset your gains, or don't have any gains to offset, you can deduct up to $3,000 of your losses against ordinary income. For a taxpayer in the 28% tax bracket, that works out to a tax savings of $840. The $3,000 cutoff applies to single taxpayers and married couples who file jointly, says Jim Van Grevenhof, senior tax analyst for Thomson Reuters. Married couples who file separately are limited to $1,500. Losses that exceed those limits can be carried into future years, where they can offset capital gains or, in the absence of gains, reduce ordinary income, says Jack Nuckolls, tax director at BDO Seidman in San Francisco.

If you're convinced your stocks and funds still have long-term potential, you can always buy them again at a later date. Just be mindful of the "wash-sale" rules, Van Grevenhof says. If you sell a stock and repurchase it within 30 days, the IRS will disallow the loss on the sale, he says.

One way around this rule is to wait 30 days before buying. If you're convinced the company will make a miraculous recovery before that period has expired, Van Grevenhof says, consider buying securities of another company or an exchange traded fund in the same industry sector.