Regardless of your age or where you are in the financial lifecycle, always look for opportunities to reduce your income taxes. A key part of successful cash management is predetermining the tax implications of all your financial activities.

This might involve:

• Consolidating deductions into one year rather than taking them over two years

• Spreading income over several years rather than taking it all in one year

• Waiting a few months to sell an asset in order to take advantage of lower long-term capital gains rates

• Borrowing against your home equity to purchase a car, for example, to generate interest payments that are deductible

Do you know what marginal tax bracket you are in? Take a look at how you file (Single, Joint or Head of Household) and determine your taxable income (not your gross income). Then refer to the chart on Federal Marginal Tax Brackets for the current year.

You do not need to be earning a tremendous sum of money before you are in the higher 25% (or more) federal tax bracket. For instance in 2008, if you file taxes as a single person, the first $8,025 of your taxable income is taxed at the rate of 10%. The taxable income between $8,025 and $32,550 is taxed at 15%. Each additional dollar is taxed at the rate of 25% or more, so your marginal federal tax rate almost doubles! If you are married and file taxes jointly, the 25% break point for you and your spouse is $65,100. Do not forget to add state income tax on top of your federal income tax, if applicable.