10 ways to cut your '09 taxes now [1-3]

Putting more in your 401k, buying a house or car or giving to charity are among the moves that, if made by Dec. 31, will help shrink your tax bill next spring.

A reader wrote me recently: "I discovered just three ways to cut my taxes: reduce the rent, give more to charity and incur large medical expenses. Is there anything I can do?"

The reader has the right idea: Anything that reduces your income or maximize your credits and deductions will reduce your tax bill.
And now is the perfect time of year to make some moves that can help lower your tax liability for 2009 - and make important decisions about the benefits of its employee, it can cut your taxes for 2010. Here are 10 ways to reduce their taxes:

Boost your 401k contributions: Any money you contribute to a 401k reduces your taxable income. You can contribute up to $ 16,500 to a 401k in 2009 (plus an extra $ 5,500 if you are 50 or more). You still have several months to increase their regular contributions, or you can add any of salary you receive help max out their contributions before 2009 ends.

Make the most of your Flexible Spending Account: Contributions to a flexible spending account to avoid income tax and social security tax, you can save 35% or more compared with spending after tax dollars. Most employers require you to use your FSA money by December 31 or before 15 March next year to make sure that we are on track to spend money in your account before the deadline (otherwise, it disappears).

You will be taking important decisions on behalf of the FSA next year over the next few months, and you may want to increase your contribution if your employer is increasing your out-of-pocket costs of health care for next year - as many of them are.

The maximum employer contribution varies, but many allow you to set aside $ 3,000 per year in cash pre-tax health care flexible spending account and up to $ 5,000 in a dependent care FSA.

Buying a house: The economic stimulus plan provides a tax credit of up to $ 8,000 for buying a first home between January 1 and November 30.

Two important notes: If you have not signed a contract to buy a home, you may be out of luck because of the time it takes to close the purchase. But - and this is important - Congress may extend this tax in 2010. A decision is expected soon.

You are considered a first time homebuyer if you (and your spouse if you are married) did not have a home in the last three years. The credit begins to phase out if your modified adjusted gross income tops $ 75,000 (or $ 150,000 if married filing jointly), and it disappears, if your income exceeds $ 95,000 if you are single (or $ 170,000 if filing married together).

A special rule allows you to receive the money quickly: After closing the home, you can claim credit for the purchase of 2009 on an amended tax return for 2008. But unlike the 2008 version of tax cuts, you need not pay back the credit, as long as you live in your home for at least three years.