It is easy to explain because most of us deal with it every month.... Mortgage Interest

Number 1 Best Tip Most Americans who itemize their "Mortgage Interest Paid" realize that a large chunk of the monthly mortgage payment is made up of interest. The IRS lets you deduct that interest in many cases on your Itemized Deductions Form.

If possible, plan to have some cash left over from the Holidays. Think about picking up the phone or going online between the holidays and making your January payment early. Call your mortgage company to review their policy, but most will allow for a phone payment or even an online payment that will be credited on New Years Eve.

Just so it is credited to your account this year your deductible amount will be increased for tax year 2007. Your savings with this tip can be estimated by multiplying your effective tax rate by your interest portion of that payment. It's easy to see how a few days of early payment will help.

Number 2 Review your income and deductions: A fundamental year-end tax move is to adjust the timing of income and deductions. If your income is high, putting off receiving more income at the end of the year can save taxes. Those who are self employed may want to send out invoices January 2nd.

Number 3 Pay deductible expenses before Dec. 31: Paying your state income tax estimate before Dec. 31 accelerates your federal deduction. You can also pay property taxes early. Pay your tax preparer for your year-end planning meetings or opt to have dental work or elective surgery before the end of the year.

Number 4 Contribute to charity: In light of the recent disasters you may feel the urge to donate. If you are cash short, do it with a credit card before Dec.31st and pay for it next year.

Number 5 Offset capital gains: Review your investment portfolio to determine whether you should sell some losers before year's end in order to offset capital gains you've already realized.

Number 6 Fund your retirement: Although you have in some cases until April 15 to make contributions to retirement accounts, you must have the accounts opened by Dec. 31. Here is how to MAX OUT YOUR IRA

Number 7 Postpone income: If you are one of the lucky ones in line for a bonus, see if your employer will hold off writing the check until January. If you own a cash-basis business, you can time receipt of income by waiting until close to the end of the year to send your December bills.

Number 8 Self-Employed Health Insurance Premiums: Self-employed individuals are allowed to claim 100% of the amount paid during the taxable year for insurance that constitutes medical care for themselves, their spouses and dependents. Make your January payment early. It too acts as a great tax reduction tactic.

Number 9 If remodeling soon, purchase appliances, insulation and big ticket items this year so you can get the Energy Tax Credit. Here is more info on that

Source:  My Home Management Club

My Home Management Club