Three tools to whittle that tax bill

"All taxpayers get the chance to choose which deduction to take," says John Lipold, a spokesman for the IRS. "Basically, it will be up to the individuals to do the math and see which deduction, state income taxes or sales taxes, will save them more."

The sales tax deduction is available to filers who itemize their expenses on Schedule A. They will have two ways to determine how much to deduct. They can claim the total taxes paid based on actual sales receipts. (Hang onto those register tapes in case the IRS comes calling.) Or they can claim the amount found in newly created sales tax tables that the US Treasury has developed.

Most people probably will opt for the latter, given the ease of use. Even so, tax professionals advise people to choose carefully.

"Every family will be a little different," says Jackie Perlman, a senior tax research coordinator at H&R Block in Kansas City, Mo. "A family with a new baby might spend a tremendous amount of money outfitting a new nursery and find that they're better off adding up their actual sales tax receipts. They could look at the table and say 'we get a $450 deduction, but we've got receipts for $500.' "

everyone wants lower tax bills, but there's sometimes a fine line between tax avoidance and tax evasion. Manipulate the tax code too far and it could lead to an audit. To avoid that situation, tax professionals and the Internal Revenue Service are warning taxpayers against using certain methods:

• Home-office deductions. Home offices can provide taxpayers with a hefty tax break, tax experts say, but doing so has been risky in the past.

"The IRS cracked down on home business deductions many years ago, when they discovered that many people took the home-office deduction, but did not have a home business," says Eric Tyson, a coauthor of "Taxes 2005 For Dummies." "So be aware that your home business deduction may raise a red flag for an audit with the IRS."

• Not reporting all income. Thanks to computer cross-checking, the IRS has many ways of finding unreported income. "Be particularly careful if you're self-employed; anyone who pays you more than $600 in a year is required to file a Form 1099, which basically tells the IRS how much you received," says Scott Gulbransen of TurboTax in San Diego. Those who knowingly hide income face substantial penalties and, depending on the amount, criminal prosecution.

• Inaccurate returns. Check your math before sending in your return. Tax-software programs will do this for you. But if IRS computers find mistakes, you're more likely to be audited. "They figure that if they find obvious errors, not-so-obvious ones lurk beneath the surface," says Mr. Tyson.

• Tax shelters and other schemes. These may sound appealing, but make sure you understand any shelter fully before turning over money to anyone. "If it sounds too good to be true, it may be," warns John Lipold of the IRS.

Some taxpayers have novel ideas to cut their taxes. But these usually don't work. "I once had a client who thought that he could claim his daughter's car as a business expense because she could then drive herself to soccer practice.... The car, he reasoned, gave him more time to spend at the office," says Matthew Schaber, a certified public accountant in Grosse Pointe, Mich. "Clearly, this didn't pass the smell test and I dissuaded him from going through with this harebrained idea."

Before going ahead with any such idea, seek advice from an unbiased third party, such as a tax accountant.

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