If you act now, there are many things you can do to minimize your tax burden. Unfortunately, most individuals wait until the year is over to see a tax accountant.

First, decide whether you want to lower or raise your current year taxable income. Most will want to lower their current year taxable income because a dollar in tax savings today is worth more than a dollar saved next year. However, often new businesses will anticipate a lower marginal tax rate in the current year, which will outweigh the benefits of tax deferral.

Income. The timing of bonuses, recognition of capital gains from the sale of stocks, and exercise of non qualified stock options are all events that can easily be delayed into a subsequent year. Income can also be deferred through various qualified retirement plans or deferred compensation plans. Business owners have even greater flexibility to adjust their revenue through the timing of invoicing and negotiating the timing of large payments.

Deductions. Cash basis taxpayers can also defer their tax obligations by paying deductible expenses by December 31. Business owners can often deduct up to $108,000 in equipment purchases even if purchased on December 31. Other expenses that would otherwise be paid in the next year can generally be deducted if paid by December 31.

For individuals, the search for deductions will focus on itemized deductions. Taxpayers can accelerate the deduction of the portion of their mortgage interest accruing to January 1 by mailing the check in December. Likewise for property taxes. If you are planning on making a gift to charity in next year, consider paying it before December 31. Get extra tax savings by gifting long term appreciated stocks or other property. You can get a deduction based on the fair market value and avoid paying capital gain on the appreciation.

Your strategy for medical expenses and miscellaneous itemized deductions may be quite different. Medical expenses are only deductible to the extent they exceed 7.5 percent of adjusted gross income. Miscellaneous itemized deductions are only deductible to the extent they exceed 2 percent of your adjusted gross income. Because of this, you may want to adopt a bunching strategy.

For example, assume $100,000 adjusted gross income and $10,000 medical expenses in both year 1 and year 2. If you pay the medical expenses in the year incurred, you will have a $2,500 deduction each year, because only the portion exceeding $7,500 (7.5 percent of adjusted gross income) is deductible. Your total deduction for both years is $5,000 (($10,000 - $7,500) x 2).

If instead, you delay paying all your medical expenses until year 2, (your Doctor will understand), your total deduction for both years is $12,500 (i.e. $20,000 - $7,500). By bunching your expenses in one year, more of the expenses are deductible because your don