This year, you can trim more than just your tree by using a few simple strategies to reduce your tax exposure. Although your "stock"ings may be in the red, now is the time to meet with a professional and learn how to save some green.

"It's best not to wait until April to see a tax expert and financial representative," says Dennis Fitzpatrick, director of advanced planning for Northwestern Mutual. "Considering many financial moves must be made by Dec. 31, taking action earlier will provide these professionals with more time to evaluate your finances before the tax season."

  Fitzpatrick recommends the following tax moves:

  Increase Expenses, Delay Income

One effective tax-planning strategy for the self-employed is to delay billing until January to reduce income. While most salaried employees cannot choose when they receive their paycheck, they should consider asking if a bonus can be held until Jan. 1. Paying January bills early, stocking up on supplies or renewing magazine subscriptions can increase business expenses. Conversely, if you anticipate making significantly more money in 2003, it may make sense to pre-bill for services to accelerate income into this year, reducing next year's tax burdens.

'Tis the Season

The holiday season is a perfect time of year to leverage the annual gift tax exclusion. Each person can give gifts valued up to $11,000 per year free of gift taxes. Gifts of life insurance can be an ideal way to leverage the exclusion.

Take the Deductions

It may sound simple, but don't leave deductions off your return. Each year, millions of dollars in deductions and credits go unclaimed because taxpayers don't ask for them. Here are a few easy ways to save at tax time next year -- but don't wait, you must take action before Jan. 1.

   --   Make charitable donations -- Contributing to charity is an
        opportunity to do something good, as well as take a deduction.  Save
        those check stubs receipts.
   --   Boost 401(k) contributions -- Increase elections to make an
        end-of-year raise work harder next year.  Be sure to meet your
        employer's match, and note that contribution limits have increased
        this year to $11,000.
   --   Establish a qualified retirement plan -- Those that are
        self-employed must set up Keogh, or Solo 401(k) accounts by Dec. 31,
        but have until April 15 to make contributions.  You can also
        establish a SEP IRA by April 15, 2003.
   --   Review social security and long-term care expenses -- Seniors who
        are taxed on a portion of their social security should look at
        tax-deferred investment options, such as annuities.  Those paying
        long-term care insurance premiums should know many states don't
        require itemization.
   --   Pay property taxes and any mortgage or home equity loan interest for
        the current year by December 31.  This may allow you to deduct both
        the taxes and interest from this year's filing.

All things being equal, Fitzpatrick recommends taking deductions this year because they are actually worth more now. Under the new tax law, rates will be lower in 2003, so it is beneficial to take the deduction in 2002 to reduce taxes owed.

"If people don't do anything else, they should try to contribute the maximum allowed in their employer-sponsored retirement accounts and supplement it by funding an IRA to the extent that contributions are deductible," adds Fitzpatrick. "It makes sense to contribute to retirement and education accounts now, rather than waiting, to give your money a better chance to accumulate. The tax advantages are an added incentive."

For example, fund an education plan. Consider a 529 plan or a Coverdale Education IRA if the money you have earmarked for education is earning taxable interest. Education credits may also be available.

Even after Dec. 31, there is still time to make some changes. Once an IRA is established, for example, owners have until April 15 to make deposits (up to the $3,000 maximum in 2002). Also, check the amount you are having withheld from your paycheck. If you receive a large tax refund year after year, you are actually letting the IRS hold onto money you could be saving or investing yourself. The IRS has a withholding calculator on their web site that helps you ensure you do not have too much or too little income tax withheld from your pay ( www.irs.gov ).

Be sure to schedule a meeting soon with a tax professional for advice about your particular situation. For more information, visit the Northwestern Mutual Financial Network site at www.nmfn.com .

Northwestern Mutual, the nation's leading provider of individual life insurance according to the American Council of Life Insurers, has always received the highest possible ratings for financial strength from Standard & Poor's, Moody's, Fitch, and A. M. Best. In addition to life insurance, the company, its subsidiaries and affiliates are also providers of annuities, mutual funds, long-term care insurance and disability income insurance. These products and services are distributed through the Northwestern Mutual Financial Network and its 7,800 financial representatives. Among its affiliated companies are the Frank Russell Company, the investment management and advisory firm; Northwestern Mutual Investment Services, LLC (NMIS), the securities brokerage firm; and Northwestern Mutual Trust Company, a special purpose federal savings bank. Further information on Northwestern Mutual, based in Milwaukee, Wisconsin, can be found at: www.nmfn.com .

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SOURCE: Northwestern Mutual

CONTACT: Jean Towell of Northwestern Mutual, +1-414-665-5167, or
jeantowell@northwesternmutual.com

Web site: http://www.nmfn.com/