LAST-MINUTE TAX SAVERS

Here's how to sharpen your filing skills and get some of the deductions you're entitled to

dollars worth of tax savings now for the chance to pull out many thousands of untaxed dollars down the road.

As is frequently the case with the tax code, there are complications. “I’d like to contribute $2,000 to a Roth IRA for 1999, but I don’t know yet if I’ll meet the income limits,” says JerÇ Eaton, 38, a sales executive with Coca-Cola who’s based in Stamford, Connecticut. “If I don’t qualify, I’ll put the $2,000 into a nondeductible IRA to get the tax-free investment earnings. Long term, that will help me meet my goal of early retirement.” (For a snapshot comparison of traditional vs. Roth IRAs, see chart. For more information, see “Taxing Proposal,” Moneywise, this issue.)

SELF-EMPLOYMENT
If you had self-employment income in 1999, you can cut your taxes by contributing to a Keogh plan. “However,” says Eardley Willock, tax manager in the New York office of the accounting firm Grant Thornton, “that plan must have been in place by the end of last year. If you didn’t set up a Keogh in time, you still can establish a simplified employee pension [SEP] plan and take 1999 deductions as long as your contribution is made by the due date of the return, including extensions. SEPs involve minimal paperwork.” Contributions to SEPs are limited to roughly 13% of net self-employment income, and the maximum contribution for 1999 is $24,000.

HEALTH INSURANCE
Health insurance provides marvelous tax advantages. The company gets a full write-off for its expenditures and employees aren’t required to declare any income. In essence, you get the value of your coverage tax free.

Again, there’s a catch: individuals who own at least 2% of the stock of an S Corporation must claim as income the value of this coverage. “My company provides health insurance to our employees,” says Smith. “The company has elected to be an S Corporation, which means we don’t have to pay corporate income taxes. However, because I own 100% of the stock, I have to pick up taxable income from the health plan.”

There’s a bright spot, though, points out Smith’s tax advisor, Thomas Jones of the Houston accounting firm McConnell, Jones, Lanier & Murphy. “S Corporation owners who have to pick up health insurance income can deduct 60% of the amount of this income for 1999,” he says. “Similarly, self-employed individuals can deduct 60% of the premiums they paid for health insurance last year.” These deductions are scheduled to rise to 70% for the 2002 tax year and to 100% by 2003. Moreover, these deductions are “above the line” (the line on which your adjusted gross income [AGI] is reported), taken on page one of Form 1040, so they’re available regardless of your income or the amount of your medical outlays.

MOVING EXPENSES
If you change jobs and change your residence as a result, you may be entitled to sizable deductions. There are two criteria: (1) Your new job must be at least 50 miles farther from your old house than your old job location, and (2) You must be

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