Analysts say this may be a good tactic if you sold stock or mutual fund shares at a loss in 2001. The losses can offset the profit from the fake sale and thus lower or erase the tax bite. (People in the bottom 15 percent tax bracket may qualify for an 8 percent capital-gains rate on shares they already own, if bought more than five years ago.)

Acing a student loan

Parents and graduates who are paying off loans for college or vocational school may now be able to claim a tax deduction for more of the interest. For 2001, up to $2,500 in interest can be deducted, $500 more than the year before. You can take this break even if you don't itemize. For interest paid in 2002, the cap will stay the same. But two other changes will allow more people to qualify for the deduction. First, the deduction won't start phasing out until income tops $50,000 on a single return and $100,000 on a joint return (up from $40,000 and $60,000). Second, deductions will no longer be limited to 60 months of loan payment. Some borrowers who stopped claiming the deduction may now be able to resume doing so.

Hidden tax rate for dependents

Figuring tax on a child's income is already complex because of special rules that apply to employment earnings of a dependent or investment income of children younger than 14. Now there's a new curve for 2001 returns. Dependents did not qualify for last year's tax rebate checks, but the IRS says they can get an equivalent tax benefit by figuring their 2001 tax under a special formula. Look for "Tax Computation Worksheet for Certain Dependents." The exercise could save up to $300 in tax for your kid.

Unsweet home office

The IRS is warning of a new crackdown on folks who attempt to deduct personal expenses by setting up a bogus home-based business. Ruses include placing file cabinets in several rooms and claiming them as offices, hiring children for phony work, and deducting personal travel under the theory that everyone is a potential client. Even if your home office is legit, there are other barriers. For example, you may not be able to deduct certain expenses in excess of the business's income. And selling a home that was used partly for business may not be free of all capital-gains tax (as it now can be for up to $500,000). People deducting home offices for the first time may want to check IRS publication 587--"Business Use of Your Home."

Don't call me, call him

A call from the IRS, even on a routine matter, can trigger anxiety and confusion. The agency last year allowed taxpayers to designate a paid tax preparer as the person to whom questions should be directed. This year a friend or relative can be designated to deal with math errors, missing information, or other goofs--or to check on the status of a refund. Don't worry: The person designated can't bind the taxpayer to paying additional tax.

Driving for deductions

Qualifying to deduct driving expenses can drive you nuts, but there are fixed allowances that at least simplify the calculations. Using a car for business can earn a deduction of 34.5 cents a mile for 2001 (rising to 36.5 cents for 2002). Driving to get medical care or as part of a job-related move is worth 12 cents (rising to 13 cents for 2002). Driving for charity yields 14 cents for 2001 and 2002.

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