Get a Jump on Next Year's Taxes

If you have a loss carried forward to 2007 and you might need to sell some holdings or rejigger your portfolio, now is a good time to do it since you can wipe out some of your gains with that loss.

Let's say you had $5,000 carried forward from 2006. Without any gains in 2007, you can take only $3,000 of that loss. The remainder will have to be carried forward again to 2008. But if, instead, you sold some holdings and generated a $4,000 gain, you'll be able to use the whole amount. The $4,000 gain would be wiped out by the $5,000 carried forward loss and you'd still be able to claim the remaining $1,000 net loss on your 2007 return.

So keep that in mind and consider selling some gains before the year is over.

Tackle the AMT Monster Now

Tons of people were thrown into the alternative minimum tax system in 2006 and even more will get hit in 2007 due to a reduction in deductions. For 2007, the government lowered the AMT exemption almost $10,000 and has eliminated credits for child and dependent care expenses, credit for the elderly or the disabled, education credits and residential energy credits against the AMT.

Uncle Sam tinkers with the tax laws every year, and it's important to keep up with these changes, which are available online at the IRS' Web site.

But back to the AMT. First, determine if your alternative minimum tax issues are "chronic."

Your case is "chronic" if you're in AMT for circumstances you really can't change. For instance, you live in an area with high state and local taxes, such as New York or California, you make around $100,000 or you own a home and have kids.