Once the New Year’s ball drops next month, it will be a lot more difficult to take action to minimize your federal and state tax bill. So this December, consider these three tips to help you avoid paying more in taxes than you have to.

1. Boost Deductions
   Increasing your deductions is the quickest and easiest way to lower your taxable income. Start with giving: Writing checks to those charities you’ve always wanted to support is the right thing to do— and a tax-deductible thing to do.

   Next, check with your lender to see if you can prepay your mortgage for the first month of 2006. This will allow you to write off more interest on your home in 2005.

   You also can save by boosting your retirement contributions. There are maximum limits to 401(k) and IRA contributions, but some plans have special “catch-up” provisions. Check with your company’s benefits administrator or a Thrivent Financial representative to learn what makes sense for you.

2. Defer Income
   At first, deferring income doesn’t sound reasonable—why would anyone want to make less money? But this isn’t about quitting jobs or dumping investments. Instead, for instance, if you know you’ll be getting a bonus for 2005, ask your employer to have the check mailed in January instead of December, so you pay taxes on the income next year. If you work for yourself, send invoices to clients after Dec. 31, so your payments arrive after the first of the year.

3. Take Credit
   Finally, looking ahead, remember to plan to take advantage of tax credits, which can go a long way to easing your tax burden. Some possibilities include the Child Tax Credit ($1,000 per qualifying child under the age of 17), the HOPE Credit, which can credit $1,500 per student for qualified tuition and fees, or the Lifetime Learning Credit, a credit of up to $2,000 for students, even those who don’t go to school full time.

   With these three simple steps, you’ll be paying less in taxes in no time.