At this stage, tax planning, for the most part, isn't going to help you on your 1998 tax return (though you can still fund some retirement accounts). We'll get back to that in a-moment. But a tax preparer may be in order right about now. Generally, the more complex your taxes, the more likely you can use the help of a preparer. For example, perhaps you've received significant income from sources other than a regular paycheck, such as investments, self-employment, stock options rental income or business interests. Or you may have experienced a major life event such as a divorce, illness, a move to another state, the birth or adoption of a child, or a death in the family. These can have important financial consequences when it comes to calculating your taxes.

Next, look for a tax preparer whose clientele and whose experience best matches your needs. For example, if you receive income from a business partnership, be sure the preparer is familiar with that area. Ask the preparer how many returns he or she prepares like yours in a year. Try to get a sense of how aggressive the preparer is in taking deductions. Is the preparer's office open all year so you have access to the person should questions arise later? What are the preparer's credentials, education and experience? Does the preparer stay current through continuing education?

The more complicated your return, the more likely you'll want to hire a certified public accountant (CPA) or an enrolled agent (preparers certified by the IRS). These preparers typically specialize in taxes and are authorized to represent you before the IRS if you need to appeal an audit. (Contrary to popular belief, any tax preparer can represent you before the Examination Division of the IRS for an audit or question about your return; they just can't represent you before other divisions.)

Taxpayers whose income is primarily from paychecks and who generally have uncomplicated returns will probably do fine with a less expensive commercial tax service or non-CPA accountant.

What if you wish you had made some different tax moves in 1998? Now we're getting into the realm of tax planning. A tax preparer can only help you calculate your tax return and help you claim all the deductions you're entitled to for last year's return A tax planner, on the other hand, looks forward to this tax year, next tax year, perhaps even several tax years down the road. What can you do during 1999 that will minimize the tax bite when you prepare your 1999 return next spring? A lot of tax moves cannot be made after December 31. For example, a business owner can't establish a SIMPLE retirement plan after October 1 or a Keogh plan after December 31 for the 1999 tax year. December 31 is also the last day you can sell losing investments to offset investment gains, or to bunch medical expenses into a single year, such as elective dentistry.

Sometimes, implementing income tax strategies to minimize the tax bite isn't even the best move because it may have undesirable consequences for other aspects of your financial life, such a investments or estate planning. That's where a good tax planner, such as a Certified Financial Planner professional, comes in. They can help you choose tax strategies that fit the needs of you entire personal financial picture. In addition, many CFP professionals prepare tax returns.

March -30- 1999