There have been a lot of tax legislation changes recently that may have an impact on your year-end tax planning for 2004. There are two major tax acts that have provisions that affect 2004 and beyond.

The American Jobs Creation Act of 2004 allows taxpayers to elect to take state and local general sales and use taxes as an itemized deduction in 2004 and 2005 instead of deducting state and local income taxes. This option can benefit taxpayers living in states with no income tax or others depending on their particular situations. This tax act also creates tougher deduction and substantiation rules for charitable contributions of autos after 2004, giving taxpayers an incentive to donate autos this year instead of next year.

The Working Families Tax Relief Act of 2004 extends some credits and deductions through 2005. The Act keeps child tax credit at $1,000 through 2009 and extends marriage penalty relief. One deduction that has been extended through 2005 is deduction for teaching-related expenses incurred by educators. A not-so-welcome change is that “bonus” first-year depreciation was not extended, so it generally will not be available for assets bought and placed in service after 2004.

The following is a checklist of actions that may help you to save taxes if you act before year-end. Not all actions will apply to everyone, but many taxpayers can benefit from numerous items. A consultation with your tax professional before year-end would allow that trusted advisor to work with you to narrow down tax savings actions specific to your situation – a customized tax savings plan.

Checklist of Tax Savings Actions:

• Increase amount you set aside for next year in your employer's health flexible spending account so that you can get tax-free reimbursements for over-the-counter drugs.

• Consider arranging with your employer to defer a year-end bonus until 2005 (to defer taxes to 2005).

• If you own an interest in a partnership or S-corporation, you may need to increase your basis in entity so you can deduct a loss from it for this year.

• Consider prepaying expenses that can generate deductions for this year. If you are short on cash to do so, you can do so via credit card.

by Dave Czach

1. Deleting Errors in 48 Hours

This is absolute fastest way to correct errors on your credit report and raise your credit score. However, it can only be done through a mortgage company or a bank. If you apply for a home loan and find errors on your credit report, request loan officer to conduct a Rapid Rescore. But don't mistake it for credit clinic tactic of multiple dispute letters.

The Rapid Rescore strategy requires proper paperwork. You need proof that item is incorrect. It must come from creditor directly. For example, a letter stating account is not your account, a letter stating account was paid satisfactorily, a release of lien, a satisfaction of judgment, a bankruptcy discharge, a letter for deletion of collection account or any relevant evidence.

This is same documentation a bank or mortgage company would require for credit accounts anyways. The difference is, now you can improve your credit score and receive a lower interest rate. The results are not guaranteed and will run you about $50 per account.

2. Deleting Negative Credit

This is infamous area where you've heard of all scams. Credit repair clinics charge "an arm and a leg" and promise a clean credit report. Sometimes even a new credit profile! People spending hundreds, or even thousands, of dollars for something they can do themselves.

Removing errors is simple. Deleting negative credit that is accurate requires advanced methods. But that is not scope of this report. So I'll focus on deleting negative errors.

Credit report errors easily disappear by using a simple dispute letter. If you have paperwork proving error as mentioned above in Rapid Rescore, send copies of that along with dispute letter. This will make credit bureau's job easier and you will get faster results.

If you don't have documentation to prove error(s), send dispute letter anyway. According to federal law, credit bureau's have a "reasonable time" to validate your claim. They will contact creditor for verification of your dispute. Then account will be reported accurately - or deleted. It has been generally accepted "reasonable time" to complete this task is 30 days.

If you're not do-it-yourself kind of person. Or don't have time. You could hire someone who is very economical.

3. PiggyBack Someone's Credit

This is a fast and great little credit score booster. But it requires a very trusting relationship. Simply put, someone else adds you to their credit account. For example, when applying for a credit card, you may have seen section to add a card holder. If your trusting person adds you, their payment history is now reported on your credit report too. If they have perfect credit, now you have a perfect account.

To make this more effective, use an aged account. Imagine if your trusted person has a 10 year old credit card account with a perfect payment history and a balance of only 50% of credit limit. Wouldn't you love to have this on your credit report? The easy part is your trusted person just calls credit card company and requests a form to add a cardholder. Once completed and activated, their entire account history and future is now firmly planted on your account. Imagine if you secured 3-5 of these accounts - especially installment accounts. Your credit score could sky-rocket!

The challenging part? Finding trusted person. Since you already have a low credit score and bad credit, how eager will someone be to make you a cardholder? Even your parents don't want you to damage their credit. But, no one says you need to possess card! In other words, your trusted person could add you as a card holder and never give you card or PIN or any information. Since bills and all account information is still mailed to trusted person's address, you won't know anything about account. This scenario could land you many trusted persons. And you still benefit with a higher credit score.

4. Playing Round Robin

This strategy is one of oldest credit building techniques around. It used to be accomplished with secured savings accounts. But now, it's much easier with secured credit cards. In fact, I've used this method myself.

Here's how it works: Take ,000 (or what you can afford) and get a secured credit card. Once received, get a cash advance of 70% of your credit limit. Get a second secured credit card. Once received, get a cash advance of 70% of your credit limit. Get a third secured credit card. Once received, get a cash advance of 70% of your credit limit.