Year-end tax planning is imperative as it allows taxpayers to minimize their 2007 tax bills by timing the receipt of income and the claiming of deductions. Take advantage of Code Sec.179 by expensing, rather than depreciating, $125,000 worth of certain computer software or other business property purchased as late as Dec. 31, 2007.

Pay Deductibles Prior to Year-End. A good way to increase 2007 deductions is to pay deductible expenses such as charitable contributions, medical and dental expenses before year-end. Keep in mind that making a charitable contribution (or a medical care payment) with a credit card will yield a current deduction even though payment is not made until next year. Note that a donor’s pledge or promissory note does not qualify as a deductible payment this year.

Make Contributions to Retirement Plans. Taxpayers who make tax-deductible contributions to a tax-deferred qualified retirement plan before

year-end will benefit from a tax deduction as well as tax-deferral on the income earned by the investment for the long-term. The funds will generally be taxed when withdrawn, but most taxpayers expect a lower tax bracket at that time. In 2007, taxpayers can contribute up to $15,500 to a 401(k), 403(b), 457 or Simplified Employee Pension (SEP) IRA plan. Taxpayers who are age 50 and older can contribute an additional $5,000 under the catch-up provisions for a total contribution of $20,500.

Make IRA Contributions.For 2007, taxpayers may contribute a combined total of $4,000 to a traditional IRA or a Roth IRA. In addition, taxpayers who are at least 50 years old by year-end may make an additional contribution of $1,000 for a total contribution of $5,000. They have until April 15, 2008, to make their 2007 contribution to either a traditional IRA or a Roth IRA.