MAKE YOUR MOVE

Justin Findlay, general manager of Findlay Chevrolet, hasn't met anyone who is buying a car before year-end to get an income tax break.

But maybe some of his customers should consider buying before the new year, because Nevadans will be able to deduct the sales taxes on their income taxes for 2008.

That's just one of several tax factors worth considering as the year draws to a close.

Investors should review the advantages of realizing any gains and losses from stocks, mutual funds and other holdings before ringing in the new year, said David Turner, a certified public accountant and treasurer of the Nevada Taxpayers Association.

Long-term capital gains, for investments held a year or more, will be taxed at a maximum of 15 percent this year.

He expects tax rates on capital gains to increase, possibly even next year.

Taxpayers generally can use investment losses to reduce their taxes on capital gains. Up to $3,000 in losses also may be deducted from their income. Any amount that exceeds gains and the $3,000 must be carried over until the following year.

"If you've got gains, this is a cheap time to realize gains, especially if you can offset them against losses," Turner said.

Stock dividends also are taxed at a maximum of 15 percent. So Turner is advising owners of some small-business corporations to pay out a one-time dividend, because it may become more expensive to take the money out as a dividend later.

Turner recommends that taxpayers who have income low enough to qualify establish Roth Individual Retirement Accounts so they can set aside money before potential increases in tax rates.

Contributions made to Roth IRAs are taxed, but withdrawals from Roth IRAs are not. The maximum amount that can be put into a new Roth IRA is $5,000 if you're younger than 50 and $6,000 if you're older than 50. Some taxpayers may decide to roll over regular IRAs into Roth IRAs to pay the taxes before a potential increase in federal rates.

Some individuals may want to make some big-ticket purchases -- such as cars, boats and recreational vehicles -- before year's end to take advantage of income tax benefits.

A typical car buyer spends $20,000 for a new car and pays $1,550 in local and state sales taxes here, Findlay said. Buy an $80,000 Corvette and the sales tax runs $6,200.

Car buyers can deduct the sales taxes from their taxable income for 2008.

Congress continued the sales-tax deduction for 2009 income taxes, but the sales tax on an auto purchased after Dec. 31 won't be eligible for the federal tax deduction for another year.

More than one-quarter of Nevadans deducted sales and local sales taxes from their income for tax year 2006, the latest year for which the Internal Revenue Service has data.

Nevadans deducted $554 million for that year, the IRS said.

The IRS provides tables that provide estimated sales tax deductions for taxpayers in various cities. Taxpayers who buy cars and some other big purchases may add the sales tax on those purchases to the deduction listed in the table, Turner said.

The alternative: Save all receipts and add up sales taxes over the year.

Looking for another way to trim taxes? Give money to charity. About 367,000 of 1.2 million Nevada taxpayers deducted charitable contributions totaling $1.45 billion in 2006.

Here are other tax considerations mentioned by the IRS:

• Teachers again may claim $250 in out-of-pocket expenses for the classroom.

• Taxpayers buying solar power panels and solar water heaters may deduct 30 percent of the cost. The government also offers tax credits for some hybrid-fuel cars.

• Real estate property taxes may be deducted in addition to the standard deduction through 2009.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.