Some tips on saving taxes, like sending a number to your bank

By , Staff writer of The Christian Science Monitor

A recent column discussed some year-end tax strategies. There are, in addition, dozens of ''tips'' that can save taxpayers money and effort. The following short items represent just a few of them:m

Your bank has your number (or it may not). Even though the banks and savings-and-loans won their hard-fought battle against 10 percent withholding on interest payments, they still have to supply the Internal Revenue Service with a ''taxpayer identification number'' for every account. In most cases, this is your social security number. The IRS uses this number to match dividend and interest income you report with numbers on the 1099 forms from your banker, broker, or whoever else is responsible for your investments.

When Congress went along with the repeal-withholding movement, it also took steps to make sure the IRS gets the information it needs. Now, people who do not supply a correct identification number or who the IRS suspects of underreporting interest and dividend income will be subject to a higher withholding, as well as stiff penalties. At the same time, institutions that do not gather all their customers' identification numbers by Dec. 31 will have to pay the cost of getting the rest next year and a $50 fine per account, which they cannnot deduct as a business expense.

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So, if you recently received a card with spaces for your social security or other identification number from a banking or investment institution and have not yet filled it out and returned it, do so as soon as you can. Even if the institution already has a number for you on file, it may be asking again to make sure the records are correct and up to date. This is not a new procedure. An identification number has always been required; Congress has just increased the incentives for making sure both sides do their paper work.

Beware of the ''wash sale.'' This is not a bargain on clean clothes; rather it is something many investors try and the IRS frowns upon.

Investors who have seen the price of a stock drop during the year sometimes decide to sell that stock before Dec. 31, so as to qualify for a tax loss. If that is all they do, the IRS has no problem. Some investors get in trouble with the IRS, however, by trying to buy back the security soon after they sold it.

The IRS's wash-sale rule says a loss may not be deducted if the same security was bought within 30 days before or after the sale. This problem can come up with both stocks and bonds.

There's an easy way to avoid this problem if you want to retrieve a stock sold earlier: Don't turn the pages on your calendar too fast. Although the rule talks about 30 days, tax experts recommend that people wait a couple of extra days, just to be on the safe side if there is a dispute between you and the IRS over when the 30-day period began.

. . . or you can try income averaging. If you have large net capital gains from the stock market, you may want to look into income averaging. If all your income - wages, capital gains, bonuses, and most other income - exceeds 120 percent of your averageable income for the previous four years, plus $3,000, then you are eligible for income averaging. (This is not just for investors, but applies to anyone who had a big jump or drop in income.) With IRS Schedule G, you can quickly find out if you are eligible for income averaging. Tax preparer's liability

We had a commercial tax preparer do our income tax returns. Everything else was fine, but it got one number wrong in my husband's social security number. As a result, our refund - more than $1,400 - did not arrive until the end of August. Shouldn't the firm pay us interest for the time the refund was delayed? A. J.

Perhaps it should, but it probably won't. Some of the major tax preparing firms, like H&R Block, will accompany you to the IRS if there is a question about your return, to explain why the preparer hired by that firm made some of the decisions he made on your return. Some companies will even pay the IRS-imposed penalty or interest (though not any additional tax) if one of their employees makes a mistake that resulted in that penalty or interest. In your case, however, there was no penalty or interest charged by the IRS, and all you lost was the use of your money for several months and the interest it might have earned, something not covered by the guarantee.

If you would like a question considered for publication in this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.

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