Year-End Tax Tips

The following moves can cut your taxes and help you save for retirement.

Continue contributing to your 457 or 401 account. Your contributions lower your taxable income, and the money grows tax-deferred for the future. You can contribute up to $15,500 to your 457 in 2008, plus an additional $5,000 if you're 50 or older during 2008. Because your contributions are pre-tax, contributing $15,500 to your 457 lowers your paycheck by just $11,625 if you're in the 25 percent federal income tax bracket. Additional state income tax benefits may also apply.

Contribute to a Roth IRA. Money in a Roth grows tax-free for retirement. Each person can contribute up to $5,000 to a Roth for 2008 if their adjusted gross income on a joint return is less than $159,000, or less than $101,000 if single. (You can contribute $6,000 if you're 50 or older during 2008.) Above those income levels, the right to contribute to a Roth gradually disappears.

Don't think you can afford to boost your retirement savings this year? See if you can qualify for the retirement savers' tax credit. You can receive a credit of up to $1,000 per person if you contribute to an IRA, Roth IRA, 401(k), 457, or other retirement plan, if your adjusted gross income in 2008 is less than $26,500 if single, or $53,000 if married.