New York (CNN/Money) - It's that time of year again. No, we're not talking about holiday shopping or dressing a turkey. We're thinking about taxes – and so should you. Sure, they're a chore. But planning now could save you a bundle when it comes time to file your return.

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Year-end tax planning usually boils down to a simple maxim: grab deductions now and delay income – from bonuses or freelance work – until 2003.

But that advice falls flat for anyone hit with the Alternative Minimum Tax (AMT). That's because under the AMT you can't claim valuable write-offs, such as local and state taxes or personal exemptions, that you'd otherwise get under the traditional tax system, warned Evan Snapper, senior manager, personal financial consulting at Ernst & Young. For more information see "Who's afraid of the AMT?"

One way to quickly find out if AMT poses a threat is by checking the Turbo Tax AMT Evaluator at Quicken.com.

If AMT isn't a problem, then it's back to scouting for any break you can lay legitimate claim to.

First, a refresher on what you get: As a taxpayer you can automatically claim a standard deduction that's worth $4,700 if you're a single filer or $7,850 if you and your spouse file a joint return. (If you're over 65 or blind, add an additional $900 to the standard amounts.)

You can then juice your savings by claiming various "above the line" deductions that will reduce your adjusted gross income (AGI), the part that's considered taxable in the eyes of Uncle Sam. Above the line deductions include deductible contributions to an IRA, child-tax credits worth $600 per kid under 17 or moving expenses that qualify for a break.

Plenty of taxpayers can actually amass more tax perks than what the standard deduction is worth. If you're among them, you'll itemize breaks on Schedule A of your tax return.

• Among the most valuable of these are the deductions you get for mortgage interest and local and state taxes. That's why tax experts advise prepaying taxes before the New Year, when they can reap you some immediate savings on your return.
• Unreimbursed business expenses may prove fruitful, too. But remember, they must exceed 2 percent of your adjusted gross income (AGI) before you can claim them. So tally up what you've spent now. If you're close to the limit, it's time to prepay membership dues to a professional organization or purchase equipment you need for your job before year's end. Other costs that qualify include union dues, tax preparation fees and investment expenses.
• Job search expenses also are deductible even if you haven't landed a new gig, but you've got to look for work in the same field that you've been working in all along.
• Medical expenses also must meet an income threshold – a fat 7.5 percent of your income.
• Donations to charities are also deductible if you itemize. So, with holiday appeals running high for various charities, the time to write a check is before Jan. 1.

For more about miscellaneous itemized deductions, see IRS Publication 529.

If you haven't already done so, now's also the time to check your contributions to a 401(k) or 403(b) account. You'll reduce your taxable income, earnings grow tax free and employer contributions are equivalent to free money. (In other words, what's keeping you?) Boosting your contributions late in the year may not save you a bundle for 2002, but make sure you start next year off right. In fact, in 2003, employees can put as much as $12,000 away into a 401(k). For more information on the virtues of these accounts, click here.

You've still got until April 15 to fund an IRA or Roth IRA, so if you haven't set one up stop procrastinating. Remember, contributions to a traditional IRA are deductible. Money you drop into a Roth isn't, but earnings in such accounts grow and are taken out tax free. This year, you can put up to $3,000 into either one of these IRAs (or $3,500 if you're 50 or over).

Self-employed individuals can save up to $40,000 by funding a Keogh plan. Contributions to a Keogh are not only deductible if you're self-employed, but earnings grow tax-free. But note: you must establish your Keogh (a bank or broker can help you do this) by Dec. 31 if you want 2002 contributions to be tax deductible this year, warned Mark Luscombe, federal tax analyst at CCH, the tax law publisher.

If you can't meet that deadline, opt for a SEP IRA. You can put in as much as $40,000 annually. Contributions are deductible for the self-employed and earnings grow tax-free. But you've got until the tax deadline plus extensions (that'd be Oct. 15, 2003) to establish a SEP and make contributions that are tax deductible on your 2002 return.

State sponsored 529 plans have become a great way to save for college since earnings can be withdrawn tax-free. And while you don't have to live in the state that runs the 529 of your choice, it may pay to stick close to home. That's because some states give residents who participate in their plans a break on state income taxes for making 529 contributions. You may have to fund that 529 by year's end to qualify. See Money magazine's breakdown of all state 529 plans, to compare.

Pat yourself on the back if you put pre-tax dollars from your paycheck into a flexible spending account for medical expenses that aren't covered by insurance. You've minimized the bite Uncle Sam can take from your hard-earned cash. Now, follow through. You've got to amass medical costs this year in order to get the money out of that FSA otherwise you blow it. (It's what's known as the "use it or lose it" rule.) If you've got money in your FSA, now's the time to get a new pair of glasses and submit co-payments for doctors visits.

Now's also the time to review your investments. If you're dreading this, take heart. You can minimize your tax hit by offsetting any capital gains against losses. Remember, you must first match long-term gains (those you've owned for a year or more and are taxed at 20 percent) against long-term losses and short-term gains (which are taxed at your regular income-tax rates) against short-term losses. After than you can mix losses and gains.

If at the end of all this mixing and matching you've got more losses than gains (or no gains at all) you can deduct up to $3,000 per year in losses against ordinary income. If you've got losses that exceed $3,000, you can use them to trim your tax bill in 2003 and beyond.

If you're thinking of dumping a mutual fund, do it before the fund makes year-end distributions, which are taxable. (Distributions usually take place in December, but you can find out by contacting your fund company.) Likewise, if you're thinking about buying, do so after the distribution to avoid the tax hit.

If you work for someone else, chances are good that you don't need to worry that you've underpaid your taxes throughout the year. But if you're self-employed or have significant income that hasn't been taxed, be careful. If by year's end you haven't paid at least 100 percent of your tax bill last year (or 112 percent if your income is over $150,000) or 90 percent of what you'll owe in 2002, you could be penalized 7 percent on the amount you owe.

Look at your tax return from last year for guidance, tax software or online calculators like the tax estimator at TaxBrain.com. If you're running short, increase your withholding for the rest of the year or make an estimated tax payment. Though payments aren't officially due until Jan. 15 you'll want to prepay state or local taxes by Dec. 31 in order to deduct them on your 2002 return, Snapper said.