I found some helpful tax tips for you - put them to good use if you can!
Here are answers to some queries about taxes in a time of financial turmoil, as well as some additional tax-savvy moves to consider, including what to do if you have near-worthless stocks or bonds, or are planning major charitable donations but are short on cash.
Writing off your losers. Investors are allowed to offset capital gains and losses, with no limit. If your losses exceed your gains, you can deduct as much as $3,000 of net losses ($1,500 if married and filing separately) each year. Additional losses get carried over into future years.
Or whether there are any plans in Congress to increase the current net capital-loss limit.
During the presidential campaign, Sen. John McCain proposed raising the net capital-loss limit to $15,000 a year. Then-Sen. Barack Obama didn't comment -- and still hasn't. So what are the odds Congress will change the law this year? "Pretty slim," says Clint Stretch, managing principal for tax policy at Deloitte Tax LLP. "Congress will have a hard time agreeing on any tax items before year end."
Separately, suppose you are considering selling stocks or bonds you bought years ago that are now trading for well below what you paid for them. Don't donate those losers to charity. Instead, consider selling them, using the losses to save taxes -- and then donate the proceeds to charity.
What do to with worthless stocks. What if you had the misfortune to invest in a company whose stock now is worthless or nearly worthless?
If a stock you bought for a taxable account became completely worthless during 2008, report it on Schedule D of Form 1040. Write "worthless" in columns (c) and (d), and enter the amount of your loss in parentheses in column (f). If you don't claim a loss for a worthless security on your original return for the actual year in which it became worthless, file what's known as an amended return for the year it became worthless. Use Form 1040X, available on the IRS Web site. You must file it within seven years from the date your original return for that year had to be filed, or two years from the date you paid the tax, whichever is later, the IRS says.
If the stock isn't completely worthless, consider asking your broker to buy those shares from you for a nominal amount, such as $1, so that you can clearly document your loss. Among those that will do so for clients is Vanguard Brokerage Services, says Rebecca Cohen, a Vanguard Group spokeswoman.
Changes in minimum-distribution requirements. During the presidential campaign, Mr. Obama called for major changes in the rules requiring millions of people 70½ or older to withdraw certain amounts of money from their retirement accounts. Several readers, including James M. Gleason of Rancho Palos Verdes, Calif., want to know if there's still any chance of action this year.
The short answer is yes. Although time is running short, it's still possible that Congress, the Treasury Department or both will take action. Many proposals are under consideration, including reducing how much taxpayers have to withdraw this year. Don't count on anything happening. But investors who haven't already made their full distributions for 2008 should consider delaying a little longer, just in case Washington delivers a last-minute Christmas package.
Speculation about possible changes rose last month when a Treasury official confirmed the department was studying the subject. A spokesman confirms the department is aware of the issue and is still looking into it.
But relief may not arrive until next year. Several leading senators recently proposed legislation that would place a one-year moratorium on required minimum distributions from retirement accounts, such as IRAs and 401(k)s, for 2009, a Senate Finance Committee staffer says. Among the sponsors are Senate Finance Committee Chairman Max Baucus (D., Mont.), Sen. Chuck Grassley (R., Iowa, the committee's ranking Republican member) and Sen. Ted Kennedy (D., Mass.). The legislation would "allow savings to stay put and avoid a tax hit when the market is down," a committee statement said.
Making a gift from your IRA. Meanwhile, some older taxpayers may benefit by taking advantage of a recently enacted law that extended the life of a popular provision that had expired. The law allows individuals age 70½ and older to make direct transfers of as much as $100,000 a year from an IRA to qualified charities without having to count those distributions as taxable income. What's more, the transfer counts toward the taxpayer's required minimum distribution. This provision has been extended through 2009.
"Not all charities are eligible," the IRS said in a statement issued Tuesday. "For example, donor-advised funds and supporting organizations are not eligible recipients."
Charging your charitable contributions. If you want to make a big gift to your favorite charity to nail down a deduction for your 2008 return, but don't have the cash to do it now, consider charging your gift to a credit card. As long as you charge your gift this year, you can deduct it for this year. "Contributions are deductible in the year made," the IRS said. "Thus, donations charged to a credit card before the end of the year count for 2008. This is true even if the credit card bill isn't paid until next year. Also, checks count for 2008 as long as they are mailed this year."