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With the holidays in full swing, most of us aren’t thinking about taxes. But before you know it, the Christmas gifts will turn to credit card bills and taking steps to reduce your tax liability now could make a jolly new year come tax time. So while you’re making your holiday list, consider adding these five things to make next April a little more enjoyable too.

Hit the Accelerator on Deductions

If you can, prepay your 2015 property and state income taxes before December 31 (unless you normally owe Alternative Minimum Tax, then hold off and pay these timely). Then make your full contributions to your 401(k) plan and individual retirement accounts. You can also prepay your January mortgage payments to capture any mortgage interest deductions this year. (In addition, that January mortgage payment will be out of the way when the Christmas credit card bills arrive.)

‘Tis the Season to Give to Your Favorite Charity

Doing good things can make you feel better about your taxes too. Donating stock or property can give you twice the benefit from your charitable contribution if you donate these instead of cash. Not only will you avoid the capital gains tax, but you’ll also get to claim a write-off that may be equal to the asset’s fair market value.

Fall is the Time for Tax Loss Harvesting

With a strong stock market in 2014, perhaps you don’t have any stocks that have lost value. But if you do, they can offer a little tax savings. By selling them before year-end and taking the loss, you can reduce your capital gains taxes on other investments, putting a few extra dollars in your stocking this season. Check with your financial adviser to see what the IRS allows on your capital losses to offset any capital gains in 2014.

You can deduct any additional losses up to $3,000 per year against ordinary income and carry forward any additional losses to future tax years to reduce capital gains taxes until the balance of the losses are used up.

What If Santa Is Bringing You Some Nice Capital Gains? Watch Out for the Net Investment Income Tax

If you weren’t made aware of this in last year’s tax plan, you might want to educate yourself on the 3.8 percent surtax that applies to net investment income for taxpayers whose modified adjusted gross incomes are above $250,000 for married joint filers and $200,000 for single filers.

Although distributions from retirement accounts are not subject to the Medicare surtax, they can affect your investment income and potentially push you into surtax territory.

If you’re taking an IRA distribution beyond the required, you could effectively add to your ordinary income, which increases more of your surtax eligible investment income and could make you pay more taxes than you thought.

If Santa brought you only winners in capital gains or IRA distributions, consider deferring the capital gains by delaying the sale of appreciated stocks until next year.

The AMT Could Be the Grinch That Stole Christmas.

The first step in planning should be to estimate your 2014 income. Depending on the result, you may be subject to deduction and exemption phase outs. That could definitely be a big piece of coal for your Christmas stocking.

Worse, if you fall into the Alternative Minimum Tax category, you may not be eligible to claim deductions at all.

Check with your tax professional if you’ve been caught in the AMT trap in the past or think you might be this year; it’s best to plan now. The prepayment of state taxes, unre-imbursed business expenses and AMT adjustments from pass through entities and other miscellaneous itemized deductions can cause unintended consequences to your tax liability before you can say ho ho ho.

Year-end tax planning should be as much a part of your holiday season as your gift list. By making plans now, you could save enough to make the New Year even happier than you thought.

Richard Bell

Richard.Bell@BeltandCompany.net

Richard Bell is an expert analyst on accounting strategies specific to small business, medical professionals and the trucking industry. He is founder and president of Bell & Co. of North Little Rock. Email him at Richard.Bell@Belland Company.net.