Start Trimming Your Tax Bill

A lot of attention is given to year-end tax planning. But getting a head start can pay off.

Contribute to your 457 plan. Every dollar you contribute lowers your taxable income — and grows tax-deferred for retirement. You can contribute up to $15,500 in 2008. And you’ll get an extra tax break if you qualify for the savers’ tax credit, which can reduce your tax bill by as much as $1,000 (or $2,000 on a joint return) just for contributing to a retirement account. To qualify for the credit, your adjusted gross income must be less than $53,000 if married filing jointly or $26,500 if single.

Donate to charity throughout the year. Charitable donations are generally tax-deductible if you itemize — contributing $1,000 can lower your tax bill by $250 if you’re in the 25 percent bracket. Document the value of donated items, get receipts for money you give to your church or school, and maintain a log of miles you drive to help a charity. See IRS Publication 526.

Track child-care expenses. If you work outside the home, you may get a tax credit worth more than $1,000 to help cover the cost of daycare, preschool, a babysitter or even day camp for your children under age 13. See IRS Publication 503 for details.