Working out with Uncle Sam.

Gear up with last-minute tax advice

If you're still hanging tough with BLACK ENTERPRISE'S financial workout, you've set up a household budget you can live with and started clipping your expenses. That's a great start. However, the benefits of your new financial plan will be short-lived if you aren't gearing up for tax season (see "How to Keep What you Earn," this issue).

So what can you do to ensure you secure a strong tax position? "Assess your tax liability throughout the course of the year," advises Una P. Black, a New York-based CPA who specializes in tax issues. Aside from your employment earnings, income from sources such as a pension fund or IRA, gambling winnings of more than $600, and the sale of stocks and securities are taxable. Says Black, "If you know that you are going to owe taxes on some income, you can make estimated payments to the government rather than pay one large sum at tax time."

You should also identify circumstances during the course of the year that may swing the pendulum in your favor. If you've made charitable donations, had gambling losses up to the amount of your winnings, own securities that have become worthless, experienced capital losses, had a child, or are entitled to education credits, you qualify for deductions. Just don't procrastinate when it comes to organizing your tax information, warns the IBS. "Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error," says the IRS.

With only a few weeks away until the big day, here are some tax tips that you can put into play for a seamless tax season.

* Manage your tax records. Keep track of all of the W2's and 1099's you receive from employers, banks, brokerage houses, pension funds, Social Security, alimony, as well as any other forms of income. You should also itemize all expenses that you've had during the course of the year, including outlays for medical expenses, mortgage interest, real estate taxes, charitable contributions, and childcare. Make sure that you have the full name, address, Social Security number, or tax identification number of the childcare provider. In addition, secure receipts for all charitable contributions of $250 or more.

* Get free tax advice. Dial up the IRS' TeleTax service, 800-829-4477, to listen to any of 150 prerecorded messages on tax issues. You can also access the IRS' Website (www.irs.gov) or call 800-TAX-FORM for forms and publications. In addition, get tax help by calling the IRS' toll-free, 24-hour hour tax help line, 800-829-1040, or by walking into any of the IRS' 400 offices nationwide to talk to a volunteer. They're available from January 27 through April 14 and can even help you fill out the forms. Just be aware that IRS tax preparers don't have the expertise of a tax specialist or an accountant. "Referring to the IRS] is fine for a basic question or a simple return," suggests Black. "However, if your return is more involved and you need tax advice, then you're better off working with a tax professional. It costs more, but most of the time it will work out to your benefit."

* File your return electronically. According to the IRS, "more than 35 million taxpayers filed their returns electronically in 2000." It's easy, and the IRS will let you know within 48 hours if there is a problem with your return. Plus, you can expect to get a refund much faster if you file electronically than if you mail in your return. According to Black, "If you file electronically, you can expect to have your check back in 10 to 14 days. The response time for a mail-in return is anywhere from four to six weeks."

* Verify your math and data entries. Mistakes in addition and subtraction are common errors on tax returns. You're most likely to err if you're calculating your return by hand. However, incorrectly entering amounts from the tax tables, miscalculating credits for children or dependents, or forgetting to put brackets around negative numbers are other common mathematical errors.

* Get your refund deposited directly to your bank account. Reduce the chances of theft and get your refund check faster by having it deposited directly into your personal account. You'll find instructions for this procedure on your tax return.

* Act fast, if you owe and can't pay. "You can get a payment plan from the IRS, but penalties and interest do accrue," says Black" I recommend getting a traditional loan or spreading the payments out over the shortest period of time."

* File for an extension, if you need more time. "If you're not able to gather all of your information by April 15, filing form 4868 will grant you an automatic extension to August 15. If there are still extenuating circumstances, you can get a second extension that will allow you to file by October 15," states Black "However, your payment is still due on April 15, and interest and penalties start accruing from that date on the amounts owed. But you should still file for an extension, otherwise you'll be subject to a penalty for not filing."