Seven Tax Moves You Need To Make For 2008

Looks like today's blogging theme is taxes! Let's finish up with these seven tax moves you need to make for 2008 before moving on to 2009. From Yahoo:

1. Don't miss the mail

If you moved in the last year or so, it's time to send out change-of-address notices. Not to the post office, but to employers, tax agencies, brokerages, and anyone else from whom you expect to get any kind of 1099, K-1, 1098, or other third-party report.

2. Get your stimulus

The stimulus rebate checks in 2008 were a real boon for many people. But not everyone got one. The good news: If you didn't get it last year, you might qualify this year.

3. Assess your paycheck withholding

It's time to review your paycheck withholding so it reflects the income and deductions you expect to have for 2009. If you need to increase or decrease your withholding, file a new Form W-4 with your payroll department. Remember to file a copy for your state, too, if that needs to be changed.

What triggers a need to make changes? Marriage, divorce, a new home, more money going into your retirement account. You can fill in the W-4 online, print it out and hand it to your payroll department. See W-4 form on IRS site (PDF).

4. Estimate how much you'll owe

Jan. 15 is the due date for the fourth installment of your 2008 estimated tax payments. Typically, if you have enough withholding from your paycheck this won't affect you. But if you have earnings from a business or investments, you may find yourself needing to make a payment.

If you expect to owe less than $1,000 on April 15, you can skip it. Otherwise, be sure you pay enough to cover 90% of your 2008 tax liability or 100% of the tax shown on your 2007 tax return. Use Form 1040-ES, voucher 4. If you use the IRS site to get your forms, be sure to select the 2008 form. See Form 1040-ES on IRS site (PDF).

If you can't pay your balance due in January, you could wait until April 15 to make the payment. This will result in an underpayment penalty, but it won't be significant on an average balance due. And, even though delaying payment is not an ideal plan, at least you'll know how much you owe by April 15 -- and that will give you time to find the funds you'll need.

There are free tools online to help you project your 2008 balance due. You also can use these calculators to generate information for your student loan applications, too.

* TurboTax's Tax Estimator: See the site.
* H&R Block's Tax Estimator: See the site.
* Bankrate.com's 1040 Estimator: See the site.
* Drake's Federal Tax Estimator: See the site.

5. Prepare for business-expense deduction

Are you using your car for business? If you didn't record your odometer reading on Jan. 1, then look at your reading now and estimate how many miles you've driven since the first day of the year. This is a good time to start tracking your business mileage for the current year.

It's also a good time to start trying to reconstruct last year's mileage, both personal and business, so you're ready for your appointment with your tax professional or your online service.

Remember, you'll need to split up your business mileage into two parts for last year. The mileage rate for business miles from Jan. 1 to June 30, 2008, was 50.5 cents per mile. From July 1 to Dec. 31, 2008, the rate was 58.5 cents per mile.

6. Avoid fighting over the kids

Each year, many divorced couples battle over who gets to take the dependency exemption for their children. Resolve this issue early. If you expect to get the exemption, have your ex sign a Form 8332 to release his or her claim on one or more of your children for 2008. See Form 8332 on IRS site (PDF).

Though the tax code defines who qualifies to claim the child, it's often the case that whoever files first will get the exemption plus any related benefits. The parent who is properly entitled to the exemption but who files later usually has to fight to defend his rights. Using Form 8332 will prevent this problem.

7. New homeowners

Did you buy a home last year? If you bought it after April 8, you may be entitled to the first-time homebuyer credit worth up to $7,500. In fact, if you plan to buy a home before July 1, 2009, you'd be wise to delay filing your tax return until your purchase goes through, so you can claim the credit on your 2008 tax return. To qualify, neither you nor your spouse may have owned a home in the three years before the purchase date. IRS has more details on the credit. See the IRS page.