Lower Your Tax Burden for 2009

Last week I posted about ways to use credit cards effectively during the holiday season. If you're not careful, you could make your 2010 very difficult because you'll be owing interest on your holiday credit card bills for months to come (if not all of 2010). This problem will only be compounded if you've got a big tax headache coming to you next year. One thing to always keep in mind is how you spend money today can affect your financial future.

So how can you make sure that your tax burden is a little less burdensome? The surest way to lower your tax income is not all that helpful, but you'll see it mentioned: make less money. Helpful, right? On the flipside, there are probably a lot of people out there who would love to have to pay more taxes--it means you've made more taxable income. That said, there are good ways to lower your burden if you're looking to save some money in 2010.

So here's a tax savings checklist. Keep in mind that some of these can be used throughout the year (and should be) rather than a last-ditch effort in the last months of the preceding year.

Itemize your deductions: childcare expenses, charity, health care, car registration expenses (especially for new car bought the preceding year), and tax preparation fees. The big kahuna is the mortgage interest deduction.

If you're self-employed, this means itemizing a whole lot of work-related expenses, such as internet, office space, office supplies, travel, and the like. Keeping strict records is vital, as you are your own boss.

Apply for tax credits: Remember, these are different than the deductions listed above. Rather than deductions from your liability, this is actual money paid out for things like college expenses, and retirement savings (such as a 401K plan).

People may have been scared off the 401K because of the recent economic turmoil and the fact that 401Ks lost their value, but they're still viable and you can save on taxable income by sheltering money in a retirement fund. Funds filtered into this account will not be subjected to income taxes.

Withhold money: This might not be feasible if you're working paycheck to paycheck, but if you withhold money on a monthly basis, you could have a bigger refund in store come tax time.

Flexible Spending Account: This depends on your employer, but an FSA is a good tax-sheltered option to pay off certain expenses--most commonly medical expenses. Money withdrawn from an FSA is not subject to payroll taxes.

Most of all, think about these things throughout the year--not just when it comes crunch time. Most everyone makes a New Year's resolution to be more fiscally careful in the coming year--this time make certain of it. While late in the year is not the best time to be figuring out your deduction potential, there's still a lot you can do even with so little time left in the year. When it comes to saving, there's no time like the present.

How about you: any tax saving tips out there? Let us know in the comments.