THE COLOR OF MONEY
CPAs offer some April 15 advice that you should heed — right now

By Michelle Singletary

I hate to remind you, but you have only about 10 months until tax season.

I know. You didn't expect to read anything about taxes until the stores were putting up Christmas decorations. But the truth is, there are a lot to things you should be doing right now to put yourself in a better tax position next April 15.

So, here is some advice from two certified public accountants.

Tim Abercrombie of Abercrombie & Associates in Silver Spring, Md., says:

• Don't wait until year's end to begin deferring income into a retirement plan. If you wait to make a lump sum contribution at the end of the year, you could be missing out on returns throughout the year.
• If you received a large refund this year, review your federal and state withholding forms now to make sure they reflect your current situation. For example, did you get married? Did you have a child this year? Did you buy a home? If the answer to any one of these questions is yes, you may need to update your W-4 form (Employee's Withholding Allowance Certificate).
• Give throughout the year. "Develop a systematic plan for cash gifts to charity," Abercrombie said. "Twenty dollars per pay period is easier than $520 at year end." Besides, charities need money all year long.
• Keep track of your unreimbursed business expenses. If you want to avoid the maddening quest to find all your receipts at tax time, set up a file folder or dedicate a kitchen drawer in which you can toss the information.
• If you work from home, designate a set space for the home office. If you do this, you can apportion a number of expenses to the home office space. But maintain proper documentation for any expenses, Abercrombie said. On this issue, you may want to consult a tax adviser to determine the appropriate expenses.
• If you are self-employed, make quarterly estimated tax payments to the federal and state government on schedule. "Some clients make federal but skip the state," Abercrombie said. "This may subject you to penalties for underpayment of tax." State tax payments can be used in your itemized deductions for federal taxes.

Barbara Ames, a CPA and partner at Fisher Barkanic & Ames in Rockville, Md., recommends you ask these questions:

• Have you reviewed last year's tax return? If not, what are you waiting for? In your tax return is most, if not all, the information you need to come up with a budget.
• Are you contributing the maximum to your retirement plan? For 2004, you are allowed to contribute up to $13,000 to a 401(k) plan. If you are 50 or older, you can make an additional "catch-up" contribution. This year, that maximum annual catch-up is $3,000. If you aren't maxing out your 401 (k), at least contribute enough to qualify for your company's matching contribution. If your employer doesn't provide a 401(k) or similar retirement plan, then max out your contribution to an Individual Retirement Account (IRA) or other tax-qualified retirement accounts.
• If you are self-employed, do you have a retirement plan established? If not, consider setting up a SIMPLE IRA, Ames suggested. A SIMPLE (Savings Incentive Match Plan for Employees) is designed for businesses that employ 100 or fewer people who earn at least $5,000 (this includes the self-employed).

Keep this in mind. Procrastination is not just a thief of time, as the British poet Edward Young said. Procrastination can also cost you some real money at tax time.