It’s all fun and games at the end of the year, but if you don’t take a few minutes to make some smart money moves, you could pay big-time next April. Here are a few things to think about as we wind our way to December 31, 2005.

Smart Money Move #1

Open and fund your retirement accounts.

If you’re self-employed, you have until December 31, 2005 to open up a Keogh or a solo 401(k) account. Depending on your income, you can put in up to $14,000 into these accounts, or as much as $42,000. Choose an investment company with a wide variety of investment opportunities (stocks, bonds, mutual funds) with low expenses. Then, read the literature before you decide which account to open.

Bonus Smart Money Move

Next, if you earn less than $95,000 as an individual or less than $160,000 as a married couple, you’re eligible to open up a Roth IRA. You can put in up to $4,000 into a Roth IRA (Assuming you earned at least that much this year) and up to $4,500 if you’re over the age of 50. While Roth IRA’s are “after tax” cash, meaning that the funds comes out of your paycheck or savings, and opening up one won’t necessarily improve your tax return, it will help your tax return when you retire, since the funds grow tax free forever.

Smart Money Move #2

Spend your flexible spending account (FSA) cash before December 31st.

These accounts, which are also known as “cafeteria” plans, are “use it or lose it” plans. If you don’t use up the cash in your FSA by the end of the year, it disappears and you can’t get it back.

So take a look at what you can buy with the account money before the end of the year: new glasses, your annual check-up, prescription drugs, or other purchases that are covered.

And don’t forget to check with your human resources department at the office. Some companies have elected to delay the spending deadline.

Smart Money Move #3

Don’t be a loser – sell your losing stocks before the end of the year and use the loss to offset any capital gains you may have.

You’ll only want to do this with stocks you hold outside of your retirement accounts. Don’t worry if you don’t have enough gains to offset the losses. If your losses exceed your gains, you can deduct up to $3,000 from your regular income or carry the losses forward to offset gains in future years.

Smart Money Move #4

Donate before the end of the year.

The year started with the aftermath of the Tsunami, and then the United States was hit with the worth hurricane season in history (by far!). The tax code has been revised to allow you to write off more of your giving to Gulf victims of Hurricanes Katrina and Rita, including being able to write off up to $2,000 if you welcomed Hurrican victims into your home, an increased mileage allowance and lifting of the limits for gifts to IRS-approved charitable organizations.

Smart Money Move #5

Reduce your income, if possible.

If you can elect to take a year-end bonus next year, you’ll reduce your income for tax purposes. The same is true if you can shift a commission into 2006.

Smart Money Move #6

Accelerate your deductions.

While the Alternative Minimum Tax (AMT) threatens more taxpayers each year, it may be possible to accelerate some of your deductions without triggering the AMT.

You can pre-pay your mortgage and then write off the interest paid this year. That will give you 13 payments for this year and only 11 for next (unless you accelerate your January 2007 payment into 2006), so make sure you can really use the deduction this year.

Some counties will allow you to prepay your real estate tax bill in December as well. If you have the cash and could really use the deduction, this might be a good year to accelerate these deductions.

Smart Money Move #7

See if any of these tax benefits apply to you:

Teachers can deduct up to $250 for the cost of school materials they’ve purchased out of pocket.

If you’re buying a hybrid car before the end of the year, you may be able to take a $2,000 deduction. In 2006, there is a tax credit which, depending on your tax bracket, may be worth more. But next year’s tax credit only counts for the first 60,000 hybrid cars sold, so you’ll have to move fast if you want that credit.