Getting a head start on your taxes

(WTNH) - You may not be ready to think about tax time, but April 15th can sneak up on you fast if you aren't prepared. Financial expert Paul Schatz from Heritage Capital in Woodbridge shared some early tax preparation tips this morning on Good Morning Connecticut to get the ball rolling.

Schatz says there are some things you can do before the end of the year that can affect your filing next spring. Here are his tips:

1. Be very careful buying mutual funds through year-end
2. It's time to marry up your taxable gains and losses
3. Similar security substitution
4. It's not too late for ROTH conversions
5. Required Minimum Distribution Waiver
6. Temporary 0% Capital Gains Tax Rate
7. Overall portfolio review is a MUST!

Schatz also says to take the following tax credits into account when preparing to file:

1. First time homebuyer tax credit
2. Cash for Clunkers and new cars
3. Qualified Energy Efficient Home Improvement tax credit
4. Alternative Energy tax credit

There are also these non-traditional tax benefits to consider:

1. Even if you cannot itemize deductions you are allowed a $500 ($1000 if married) deduction for real estate taxes in addition to the standard deduction. Also, if you cannot itemize deductions, you are allowed to deduct up to $1,200 in sales taxes on a new car purchase after 2/16/09 in addition to the standard deduction.
2. There is a new American opportunity tax credit for education expenses for '09 and '10 up to $2500 (100% of first 2k in expenses, and 25% of the next 2k in expenses). If you do not have a sufficient tax liability to use this credit it is partially refundable up to 40% of the credit. This phases out for income above 80k (160k for married)
3. For '09 and '10 withdrawals from 529 plans for the purchase of a computer for higher education are tax exempt. Prior to this you could only withdraw from a 529 for a computer if it was required by the college as a condition of enrollment.

Schatz says if you get started early, doing your taxes will be much easier than waiting until the last minute. For more information about Paul Schatz or Herital Capital, visit the Heritage Capital website.