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YOUR TAXES : Taxes Can Be Your Friend : Rating the Tax Guides : A good book can help you save big on your income taxes.

March 05, 1989|MIKE QUINN | Mike Quinn is a Southern California free-lance writer

With the tax laws the way they are today, it is easy to be pigeonholed among the fabulously wealthy.

Consider: To be in the same tax bracket as the Rockefellers, your taxable income need only be $17,851 if you are single, or $29,751 if you are married and filing a joint return. Either amount puts you into the 28% bracket, the same one applicable to the very rich.

Moreover, the tax simplification and reform act of 1986 created about 40 new Internal Revenue Service forms while many deductions and credits used extensively by middle-income taxpayers were abolished.

While the "super rich" have accountants and advisers to deal with such matters, the rest of us are often left to flounder. To the rescue comes a crop of income tax books, aimed primarily at middle-income taxpayers who must be willing to spend some time to save some money.

Beware, most of these books are thick--600 pages or so. They all follow the same general format: guiding a person through the preparation of a federal income tax return, starting with Form 1040 and ending with Form 8582, passive activity loss limitations. Along the way, some provide more help than others in actually completing the forms. Some provide much more advice on reducing or avoiding taxes.

For tax novices, there are two good selections: "H&R Block 1989 Income Tax Workbook" (Collier Books, Macmillan Publishing Co., $9.95) and "Winning on Your Income Taxes" by Dennis Kamensky (Winning Publications, $7.95).

The text of the Block book increased by more than 50% over the 1988 edition. The simplified workbook approach has not changed. Pages 11 and 12 offer a "self interview guide" that narrows in quickly on what forms must be used. The book includes "an encyclopedia of tax" that is more a potpourri than an encyclopedia.

Kamensky's self-published book is filled with good advice on preparing the forms. For instance, he devotes nearly a page to the seemingly innocuous "occupation" box at the very end of the 1040 form. He writes: "I am in no way advocating falsifying your job title, but look at the various aspects of your work and, without dishonesty, select a title that will allow you to take the most deductions."

Kamensky argues that someone in a technical position who lists "clerk" will likely trigger an audit for legitimate deductions. He lists other occupations that should be avoided, if possible.

The second batch of books, while helpful if preparing a return, are oriented more to explaining the tax law and advising people how to arrange their personal finances. These are the books that can answer the questions about special situations. All four are recommended as essential reference books.

"Guide to Income Tax Preparation" by Warren H. Esanu, Barry Dickman, Elias M. Zuckerman and Michael N. Pollet (Consumers Union, $10.95) is written by four partners in a New York law firm. Last year's edition was the first, and this year the table of contents and the index have been expanded significantly.

The publication stresses record-keeping in these days of ever-increasing cross-checking by computer. A handy list of records you should keep quickly tells what should be maintained or kept to support exemptions, income, adjustments to income, itemized deductions and credits.

"Sprouse's Income Tax Handbook 1989" by Mary L. Sprouse (Penguin Books, $9.95) is the only tax book with jokes and puns. Sprouse, a tax law attorney who lives in Los Angeles, admits to being an English and history major in college. She clearly enjoys her subject, especially in a 30-page section entitled "Eight Basic Tax Principles." Who else could make jokes about the accrual method of accounting?

Part III of the guide contains special sections dealing with, for instance, tax shelters and tax advice for homeowners and executives. The chapter on home-based businesses is one of the best in any of the tax books on a special circumstance.

"J. K. Lasser's Your Income Tax 1989" (J. K. Lasser Institute, $10.95) is the granddaddy in the income-tax book field. This edition is the 52nd.

Like those before it, the Lasser guide is shorter on graphics than the others, but information is packed into this book. What's more, the index, the largest of any of these books, is divided into five sections: a general index plus specialized ones dealing with income inclusions, income exclusions, deductions and what may not be deducted.

"The Arthur Young Tax Guide 1989" (Ballantine Books, $11.95) comes from the Big Eight accounting firm of Arthur Young & Company.

The format is unusual. The IRS publication, "Your Federal Income Tax," is reprinted. The official word is supplemented throughout with comments and suggestions from an army of professional tax preparers.

The book, includes asides dubbed TaxPlanner or TaxSaver, advice that elucidates a section or aids in reducing the overall tax bite.

And then there is the book you will need if "Trivial Pursuit" ever comes out with income tax questions. This publication, "Complete Book of Tax Deductions" (Harper & Row, $10.95), is a compendium of deductions based on court decisions, IRS rulings and numerous other sources.

This book answers these questions, as well as many others: Can I deduct the cost of treatment for narcotics addiction? (Yes.) Can I deduct the postage used to answer fan mail? (Yes.) Can I deduct for sonic-boom damage? (Yes.)

It's not for most of us, but tax professionals could find a place for it on their bookshelves.

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