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Follow-up: - Before delving into tax matters, I'd like to share with you two more resources that developed from my prior articles about living longer and about insurance.   First, I had the opportunity to visit the Bayberry Care Center in New Rochelle, NY with my mother as a possible place for my 89-year-old Aunt Estelle to live when she left the hospital.    Bayberry is a well-run vital loving residence of 60 patients.   My mother and I not only got a chance to see the facilities, inside and out, but also talk at length with many people on staff, nurses, recreation director, and managers.   The owner-operator, Len Russ, gave much of his time over the following days to help me with plans for my aunt.   Although my aunt passed away, the knowledge gained about Bayberry Care Center is invaluable.   My mother, while touring, said to me "This is the place I want to go if it happens in the future that I can't handle living alone."    If you have a loved one considering a home, please call Len Russ.

The second important resource concerns an expert in health insurance for seniors.   Karl Mollin called me as a result of prior articles that dealt with aging and insurance.   We met for coffee at Cosi to share strategies we use in helping seniors.   He told me several stories of how he has helped several seniors to save hundreds and thousands of dollars on health insurance.   I was struck by his thoroughness and his altruistic interest in helping seniors, partly as a result of having been through some of the same issues himself.   He offered to give his advice without charging a fee.   Also, he will meet with groups of seniors at senior centers if directors so request.   Call me and I'll put you in touch with Karl.

Now, about money-saving   tax tips:

#1 - Use a CPA - If you have a simple situation (e.g. just W-2s and a few 1099s for interest), then preparing your own tax return online or using Turbotax or TaxCut is probably fine.   However, if you're looking for fresh ideas and ways to truly cut your taxes, then get professional help. Use only CPAs who come highly recommended to you by people you know well and who have similar financial circumstances.   Do your homework, including reading brief articles on choosing a CPA that you can google.   Screen a few candidates with probing questions.   I think it's worth a few hundred extra dollars in fees to possibly save thousands in taxes.   And you may find a CPA who lasts a lifetime with you as an advisor.   Have him or her review a few prior returns to uncover possible mistakes, and then file amended returns to recoup money.

#2 - Live your business - If you are in your own full-time business, you are accustomed to keeping track of expenses that are deductible, and putting a business spin on what may be first overlooked as personal.   But if you just started a business or operate a sideline business (let's say selling items on the internet) you may not realize that losses on Schedule C are deductible dollar-for-dollar against other sources of income.   Also, if you have two businesses and file two Schedule Cs, the loss on one can offset the loss on the other, not only reducing income taxes but also self-employment taxes.   As you build your own business, evaluate whether you can hire your children, which may be a legitimate way to shift your higher-tax-bracket income to their lower-tax-bracket.   Also, they could then contribute to Roth IRAs due to the earned income and may qualify for education credits that may otherwise be lost due to your higher income levels.   The organization form of your business (sole proprietorship, S or C corporation, partnership, LLC, etc.) is important but will be covered in a future article.

#3 - Bunch income and expenses - Usually you need to act before December 31st.   Let's say you had huge deductible expenses (e.g. medical expenses, business losses, high fees paid, etc.) but low income. Consider pulling money out of your retirement accounts and tax-deferred annuities to the extent of your excess deductions, resulting in freeing up that retirement money from any future taxes.    On the other hand, suppose you expect a big bonus or a profit windfall from a large customer order, then you should plan to buy the needed equipment in the same year, electing IRC Section 179 treatment so you can write off the full value up to $108,000 in 2006 and $112,000 in 2007.   A little foresight and planning can save thousands.

#4 - Investment securities - When downsizing the portion in equities or mutual funds, sell the positions with higher cost if other factors are similar.   If you have a large equity position in employer stock in your retirement account, investigate whether a "NUA" ("Net-unrealized appreciation") strategy makes sense in your circumstances, by treating some of the gain as a capital gain vs. an ordinary gain.

#5 - Retirement plans - If you are making profits you should set up the plans and contribute what you can afford.   Each year review the type of plans available to you and your changing circumstances.

#6 - Rental property - Don't forget to deduct your travel expenses in checking up on your rental property, and the expenses of repairing and maintaining it.   What about the online costs in trying to market it?

#7 - Review tax law changes - Don't overlook credits for hybrid cars, residential energy improvements, solar equipment, and hybrid vehicles.   Avoid the usual taxes upon withdrawing from IRAs by directing amounts up to $100,000 to a charity.   And many tax provisions grant relief and benefits to those affected by qualified hurricanes (Katrina, Rita, Wilma).

#8 - Don't be afraid to file an extension - It's better to give yourself   (or your preparer) more time (up to October 15) than to rush preparing an incorrect return.

About the author:

Frank Sisco is a CPA and Personal Financial Specialist and writes on topics related to life and money.   He resides in New Rochelle, NY with his wife and daughter.

About the author.

Frank Sisco is a CPA and Personal Financial Specialist, and author of many articles about personal finance and issues of life and money.   His firm, Financial Management Corporation, is located in New Rochelle, NY.  Frank makes his home with his wife and daughter in New Rochelle, NY.  He can be reached at 914.740.4422 or by email at ideasmoney@aol.com.  Visit his website at www.LifeAndMoney.com, which contains this and prior articles.