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IT'S DECEMBER. DO YOU KNOW WHERE YOUR TAXABLE INCOME IS?

December 10, 2007

Most of us have three weeks left in our taxable year. It's asking a lot of three weeks to cure the tax sins of the other 49, but there still may be time to pull it off.

The place to start is to figure out what your taxable income will be if you don't do anything else. Unless you know where you stand, you are like a traveler without a map, a compass, or even a destination.

Here are some steps to help you get there:

Get out your 2006 1040. Look it over line-by-line, and see what items are likely to change. Did you have a big capital gain? Did you sell a business? Did something happen in 2006 that won't happen again?

Look at your last paycheck. Add in any more checks this year, and any year-end bonuses you might have. This will give you your expected 2007 salary, withholding, 401(k) contributions, and any other deductible take-outs from your paycheck.

Get out your last brokerage statement and look at where you stand for capital gains for the year. It should also have your dividends and interest, and if you have any, your investment interest.

Look at your mutual fund statements to see where they stand for the year. You should also go online and see what they plan on doing for year-end capital gain distributions.

Do you have any retirement plan payouts going? Any other income items? If you are a business owner, where does that income stand?

Then think over your deduction side. DId you have an unusual losses? Did you contribute to an individual retirement account? A health savings account? Did you refinance your mortgage or buy a new house? Did you do something big for charity?

Once you have this information, you can see what your taxes look like so far. Then it's time to see what you can do about it.

This is the first installment of a daily series on 2007 year-end tax planning that will run through December 31. Don't miss a one!

Tags: year-end tax planning.

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