1. Better mix of investments. Try to raise that bond stake for safety, and boost foreign-equity exposure for growth.

2. Simplify. Reduce holdings to 10 funds and roll over old 401(k)s from prior jobs into a Roth IRA to make portfolio easier to manage.

3. Invest in index funds. Sell actively managed funds in their taxable account, harvest tax losses, and move to low-cost exchange-traded funds.

Credits of Note
Two special tax credits worth noting for 2008 are the recovery rebate and first-time homebuyer credits.

Deductions You Want to Consider
Even though credits save you more than deductions, you still want to take deductions when you can.

Finally, exemptions are another area of tax breaks to know about. There is a personal exemption of up to $3,500 available to most taxpayers. If you’re lucky enough to work for an employer that offers Qualified Transportation Fringe Benefits, you also don’t have to pay income taxes on these benefits. Additionally, if you are in the military, any pay you received while serving in a combat zone in 2008 is exempt from income tax.