Accelerate income
Again, this runs counter to traditional planning. But just about everyone expects tax rates to go higher under President Obama. The top rate for ordinary income could shoot to 39.6% from 35%. That jump will either happen in 2009 or 2010, but it will most certainly happen. "We haven't seen tax rates this low since the 1930s," says Mary Ann Sisco, National Wealth Adviser for J.P. Morgan Private Wealth Management. These rates won't last much longer. True, the higher rates will probably only apply to those making more than $250,000, but some people will see their income shoot up to that level due to one-time events, such as lump-sum severance payments, bonus checks, incentive stock option transactions, 401 (k) distributions or freelance project payments. To the extent you are able, conduct those transactions by Dec. 31. Likewise, if you're selling a second home at a profit, try to close by Dec. 31. You only get the $250,000 exclusion ($500,000 for couples) on a primary residence. Other property is subject to capital gains rules.