Another from last year's tax season: E-filing not a deal for all taxpayers. It's certainly a boon for the IRS, which is one reason they're energetically promoting the Free Filing program (in the planning stages when this article was written). But it doesn't do much for the taxpayer, unless you get a refund anticipation loan, and those are expensive. Worse still is that e-filed tax returns are scrutinized much more carefully for fraud, which may mean that your skating through on a shaky deduction will get dinged for the first time. Dealing with the IRS is unpleasant enough as it is, for most taxpayers; the additional concern that your return is much more likely to be checklisted by a Criminal Investigative agent might give some the willies. On the other hand, of course, this means that the fraudulent filers -- the same folks who, back in the 80s when SSNs were first required for all dependents, suddenly let 9 million little deductions vanish like so many deducted goldfish -- will get detected and screened out, which is better news for the average taxpayer pulling his weight.

If you can pass the scrutiny, though, and there's no reason that most simple and honest filers shouldn't, feel free to click over on the Complete Tax logo to the right -- I get an affiliate vig. It's half the cost of most tax software or even the cheapest preparer service!

From last year, to be true, but basic advice tends to remain sound: How to choose a tax professional for your needs, explaining the differences between CPAs (Certified Public Accountants), CFPs (Certified Financial Planners), Enrolled Agents, and other terms such as Electronic Return Originator (ERO), although the public doesn't generally run into the latter. It does point out that the IRS has both a page where you can find an e-filer near you, and an annual recognition of exemplary e-file originators -- one firm from each state that had the fewest errors and other considerations.

Ms Money has a reference list for financial planner titles, including a few more that are less closely related to taxes -- such as the investment advisors known as CFA (Chartered Financial Analyst) and ChFC (Chartered Financial Consultant).

Tax Observer, it should be noted for my regular readers (are there any of you yet?), is considering looking at achieving some sort of certified professional status, while his technology career remains on hold.

I do have another comment on the proposal that Traditional IRAs may go away. While again I prefer to take no position on the politics of this matter, and in fact the article points out correctly that the Roth IRA can be, in the long run, much more valuable to the taxpayer, I think in principle that taxpayers ought to be allowed to choose between the two. The Traditional IRA deduction was just raised to $3000 for the 2002 tax year, a long-overdue adjustment for inflation (and one that, much like the bipartisan-popular Earned Income Credit, gives the most benefit to the lower income scales). It would be a shame to lose this, one of the few above-the-line deductions that is available to everyone who can sock away a couple of grand.

All you really need to know about the "SUV Loophole" that has been making the rounds is this brief quote: To be honest, I never knew about it, said one auto dealer; and another said overall impact has been negligible because he sells few such SUVs. The Tax Observer Editor does maintain he will stay out of politics, but it is clear from this particular issue that few people understand the basics of a Schedule C business filing, let alone a Section 179 equipment deduction. For starters, taking a one-time deduction for a vehicle is very bad tax planning, for a variety of reasons, but mainly coming down to the generosity of depreciation and vehicle mileage deduction.

Tax Observer, therefore, to shed more light on the subject and dissipate the heat, will begin a series of articles explaining Schedule Cs and ending with an explanation of how best to handle an SUV deduction. Whether you, as a well-paid professional, deserve this deduction is a matter of politics, but for the moment it remains legal, and thus Tax Observer believes you are entitled to every penny you can deduct this way. Check back later Friday for the first part of the series.

The best way to save money on taxes, of course, is to reduce your taxable income. Still, many tax breaks go unused because people don't know about them, or don't realize their value. The biggie for most wage-earners today is the 401(k), of course, but there are many other ways to take in income and stash it away to get a credit or deduction, including the recent medical and education savings accounts. And if you're low income, don't overlook the earned income credit -- it's like taxes paid back to you.

Chances are, unless you're a financial officer in a large business, you've never heard of the Electronic Federal Tax Payment System. If your annual tax payments exceed $200,000, though, you're required to use it. As an individual, you may have wished for a way to pay the government online, and this is the way to do it. There's no fee, and you can schedule payments -- e.g. for estimated taxes, or an installment plan for tax arrears -- up to an entire year in advance.

The site, alas, has designed by government bureaucracy written all over it. First you have to get forwarded to the correct regional site, and then everything you look at -- including the frequently asked questions and the front page -- is served up by https secure 168-bit encryption, making using the site ghastly slow even if you have broadband. One would think that with the e-file push this site would be a little more usable. Why does the end-user have to select which site to connect to, when it's a simple routing-by-state methodology? Why a cumbersome snail-mail verification process, even for penny-ante users? Perhaps somewhere along the line they'll conform better to the expectations of online users and get more individuals signed up.