Be sure, however, that you qualify for the IRA deduction. There are some income limitations if you are covered by a retirement plan through your employer. Even if you're covered for only part of the year (for example, before you were laid off or changed jobs), you need to look into the income limits to figure out if you are eligible to deduct your IRA contributions.
If you are eligible, then you can deduct up to $5,000 (or $6,000 if you are age 50 or older). Your deduction is limited to the amount you actually contribute by April 15th. And be sure to tell your financial institution that your contribution is for the 2008 tax year, as that's how you'll be able to deduct it on your '08 tax return.
Roth IRAs have the same contribution limits, but different eligibility requirements based on income. Roth contributions are not tax-deductible, but distributions from a Roth are generally tax-free. There's additional factors to consider when deciding between a Traditional vs. a Roth IRA, but in the end it comes down to whether it's more advantageous to take the tax-deduction now.
Self-employed persons have another option when it comes to IRAs. They can fund a SEP-IRA. Contributions are based on the net income from a business, and SEP-IRAs can even be funded as late as October 15th for the previous tax year. But in order to get this extra time to fund the SEP, you'll need to file an extension with the IRS. Furthermore, you'll need to finish up the business portion of your tax return so you have figures on which to calculate your SEP-IRA deduction.
Funding an IRA can also make you eligible for the saver's credit, a federal tax credit available for people who save for retirement using an IRA, 401(k), or other type of retirement plan.