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Seven year-end financial moves that could lower your tax bill

These strategies may save you a bundle when Uncle Sam comes knocking April 15.

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The holiday season has arrived, so deck the halls, hang the mistletoe, and make sure to act on a few lessons from last year's tax return.

Even though taxes for 2007 aren't due until April 15, 2008, tax experts say now's the time – before Jan. 1 – to make the financial moves that can lead to big savings on tax day.

"After the end of the year and before April 15, just about the only thing you can do to help out your tax situation is to fund your deductible IRA [individual retirement account] or something like that," says Mark Luscombe, principal analyst for CCH, a publisher of tax-related information in Chicago. "But there's loads of stuff you can do before year-end."

As the countdown to 2008 begins, opportunities still beckon for those who can fit a little tax planning into their hectic year-end schedules. Here are seven moves that tax experts recommend doing before midnight on New Year's Eve:

1. Maximize retirement contributions

Workers with a 401(k) or 403(b) retirement savings plan benefit on multiple levels by steering cash now into those coffers, according to Barbara Steinmetz, a financial planner with tax expertise in San Mateo, Calif. Whatever goes into those vehicles, she explains, comes off one's adjusted gross income (AGI). Hence, those who take this step have lower taxable incomes than they would otherwise.

Plus, workers whose employers provide a matching contribution are, by funding their accounts, making sure they don't leave free money on the table. And maximizing one's retirement contributions increases the likelihood of having enough money on hand down the line for a comfortable retirement.

"If you can lower AGI, you could be affecting other numbers," such as medical deductions, which are calculated as a percentage of AGI, Ms. Steinmetz says.

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