Families: Fight the AMT

You can deduct interest on a loan of up to $1 million if your loan was used to purchase or improve your residence.

Same goes for a home equity loan. If the money went back into your home, you've got up to $1 million deduction. But if you used to loan to buy a new car or take a trip around the world, you can only deduct the interest up to $100,000 in interest.

If you got a new mortgage in 2006, you may have paid points -- a.k.a. loan-origination fees or discount points. Points are extra charges paid up front to get a lower interest rate on your mortgage. If you paid points in 2006, those are deductible.

On the flip side, if you paid points on a refinancing, they must be amortized over the life of the loan. So if you paid $3,000 in points on a 30-year-loan, you'll need to deduct $100 each year.

A Few More Year-End Reminders

• The kiddie tax rules changes for 2006. Now, kids 17 or younger still pay tax at your higher income tax rate. So don't gift appreciated assets to your high-schoolers and expect to sell those assets at a lower tax rate. Use your 18-year-old instead.
• Go through your portfolio and sell your losers before year-end to offset any other capital gains you may have generated in 2006.
• Pay attention to the mutual funds that are not in your retirement accounts. They're probably going to be making big dividend distributions any day now, and those distributions are taxable to you. But if you don't like the fund anymore, sell it before it makes those distributions. No sense paying taxes on distributions from a loser fund. Check the fund's Web site for details.
• Be super charitable before year-end. Even if you write a check or charge your donation, as long as its dated by Dec. 31, it'll count for 2006.

So good luck -- with the parenting and the taxes. I'm struggling with both, right along with you.