At the end of one of the worst economic years in decades, there's one advantage to those plunging stock prices.
CPA and financial planner Michael Velasquez says you can unload under-performing stocks and declare a capital loss.
"Your stock losses can be written off up to $3,000 against normal income," Velasquez said.
If you're lucky enough to have stocks that went up in value, you might consider selling some of them, too. Capital losses can offset capital gains 100 percent.
Giving to charity by Dec. 31, can help reduce your tax bill, too. But if cash is in short supply -- clean out your garage. What you don't want anymore is just what many charities need. Just make sure you get a receipt for your donations.
"That receipt allows you to deduct the fair market value of the goods you donated," Velasquez said.
Kids in college are a big expense, but they might also help cut taxes. The IRS offers tuition breaks. There are two kinds of tax credits, which could reduce the total taxes up to $2,000. The deduction could reduce taxable income up to $4,000. Velasquez advises that your tax advisor should compare all three options to determine which does you the most good.
And here are a few more tips to help save on your 2008 taxes.
Pay January's mortgage payment before Dec.31. You'll get an extra month of deductible interest.
Consider prepaying next year's property tax.
If you're self-employed, stock up on business supplies and equipment.
And if possible, consider deferring taxable income until next year.
One last bit of advice from CPA Michael Velasquez: "If you don't do some of these things before Dec. 31, you basically miss opportunities."