(Word count = 595 words plus 22 words for About the Author)

If you are very stressed out about not being prepared to file or pay your income taxes, please don't   despair.   You can send in a form and get an extension of time until October 15, 2007) and you can pay up now just what is needed to avoid underpayment penalties, although interest will accrue.   Then, when your head is clearer and your purse fuller, you can better deal with it.

Here are a few tax tips, some which may save you money and others may save you stress or time.

#1 - Use a CPA - If you have a simple situation (e.g. just W-2s and a few 1099s for interest and dividend income), then preparing your own tax return free online or using low-cost Turbotax or TaxCut is probably fine.   However, if you're looking for fresh ideas and ways to truly cut your taxes, then get the professional help of a sharp CPA who comes highly recommended by people you trust.   Do your homework by googling brief articles on how to choose a CPA who is right for you, and then screen several candidates with probing questions.   The extra fees you pay may be recouped easily by the taxes, time and stress that will be reduced.   Also, you may end up getting an objective advisor who lasts a lifetime.

 #2 - Live your business - 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.   Consider hiring your children as a possibly 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.

#3 - Bunch income and expenses - Try to project income and expenses from one year to another.   When deductible expenses are high (e.g. medical expenses, business losses), you should generate income (e.g. retirement plan withdrawals) in that year.   When income is high (e.g. profit windfall, big bonus) then generate expenses (e.g. equipment purchases can be written off up to $108,000 in 2006 and $112,000 in 2007 using Internal Revenue Code Section 179).

#4 - Consider a NUA strategy when selling employer stock in your retirement plan - Evaluate whether a "Net Unrealized Appreciation" strategy in your circumstances saves you money by treating some of the gain as a capital gain instead of as an ordinary gain, at the cost of no longer deferring the taxes.

#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.   Be wary of plans loaded with expensive life insurance or overly aggressive actuarial assumptions.

#6 - Rental property - Don't forget to deduct your travel expenses in checking up on your rental property, and the expenses of repairing, maintaining and advertising it.

#7 - Review tax law changes - Don't overlook credits 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).

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.