A little advance planning can help you reduce the taxes you owe - or at least make the process less painful. Whether you're a current traveler or a permanent staff member, chances are you'll find many of the following suggestions useful.

PROTECT YOUR "TAX HOME" STATUS
Do you have a permanent "tax home"? If so, the single most important thing to do every year in order to continue to qualify for tax-free housing and temporary living expense deductions is to return to your tax home to live and work…or at least to look for work. Tax law does not define precisely how often you must return home, nor for how long - only that it be on a "regular and continuing" basis.

You may have heard of a "24-month rule." It does not exist in tax code; perhaps this perception started as some agency's policy. Since there is a precise tax law definition for "temporary" - less than 12 months - it follows that you should return home at least once a year. Often, it is recommended that travelers take one or more local 13-week assignments annually.

If you cannot find employment at home, be sure to document job search activities. Keep a record of ads answered, interviews scheduled, phone interviews, offers, rejections, and contact names.

In addition, if your "tax home" is in a tax state, you'll have state tax withheld while working there. This can help to offset your home state tax liability.

ORGANIZE YOUR TAX MATERIALS
Experts suggest travelers organize all of their expense receipts, check stubs, and credit card information by deductible expense categories. Keeping an itinerary grid is another helpful tool. Before year-end, fill out your annual list of assignments, hospitals, modes of transportation, and travel destinations. Don't forget to file documents for easy retrieval in the spring.

CONSIDER PROFESSIONAL HELP
While tax preparation isn't rocket science, there's a lot to know, and it changes every year. Most paid preparers have the experience of hundreds of returns annually. Weigh the value of professional help versus completing your own forms. In particular, keep in mind that the majority of problems encountered by do-it-yourselfers usually involve not filing multiple non-resident state tax returns when necessary.

If you're adamant about preparing your own taxes, attend a seminar to increase your knowledge of current requirements. Many tax advisors offer this service within their communities or online. Some travel companies may also provide educational programs and interactive question and answer periods that address the most important tax issues affecting mobile providers.

USE A PERSONAL FINANCE PROGRAM
Either buy a personal finance program, such as Microsoft Money, QuickBooks, and Quicken, among others, or start to use the one you currently have. These tax-deductible packages, which sell for less than $100, take a lot of the frustration out of preparing your taxes. Even if you plan to have your returns prepared professionally, consider using one of these programs to help you organize materials for your tax advisor.

Programs combine your expenditures into deductible expense categories, collecting and summarizing checks, credit charges, and cash receipts for each section. Often bundled free with a new computer purchase, the software allows new entries at any time, even after the calendar year is over. Another perk: A diskette or CD travels much better than boxes full of receipts.

After you're done with this year's taxes, consider a practical resolution for the New Year. Avert procrastination by starting to enter your 2003 expenses in January.

ACCELERATE EXPENDITURES INTO THIS YEAR
If your medical expenses are approaching 71/2 percent of your adjusted gross income (AGI), consider receiving and paying for any upcoming additional medical, dental, or other healthcare to exceed the threshold. Keep in mind that this figure represents a "floor," so only the amount over the percentage is deductible.

Is there any needed equipment, supplies, scrubs, or shoes that you could purchase before year-end? How about license renewals, state licensure for your new assignment, or continuing education units? If so, you can use your credit card to get the deduction, even if you don't pay the appropriate amount on your statement until next year.

DOCUMENT YEAR-END GENEROSITY
Holiday charitable gifting is not only good for your soul, but also good for your taxes. Be sure to always pay by check or to get a receipt for your records.

When you take a new assignment, chances are you get rid of items that you no longer use or those that are too bulky to pack efficiently. Instead of throwing everything out, shipping things home, or leaving stuff behind, consider making a charitable donation. Local religious organizations or non-profit thrift stores will gladly take usable items. Simply get a receipt and write off the fair market value. The accepted Salvation Army schedule of thrift store values is much more generous than most people's estimates ($3 to $5 per item instead of $5 per bag of clothing).

START OR CONTRIBUTE TO AN IRA
For travelers, individual retirement accounts (IRAs) are usually more of a long-term tax planning strategy, since most are not eligible for deduction. However, opening an IRA can be a good idea if you either don't participate in a 401k or are single and have an AGI of less than $44,000. In these cases, you qualify for a deductible IRA contribution of up to $3,000 - an increase of $1,000 over last year's limit. This saves $840 of tax in the 27 percent bracket. If you do have a 401k, are single, and make over $44,000 but less than $110,000, you are still eligible for a non-deductible Roth IRA contribution up to $3,000.

Should you already participate in a 401k, experts often recommend making a Roth IRA contribution as well. The Roth IRA is an excellent way to help make up for reduced retirement earnings and the eroding effect of inflation. Unlike a traditional IRA, which has tax-deferred growth and withdrawals after age 591/2, the Roth IRA provides tax-free growth and withdrawals during the same period.

Of the people who plan well for retirement, very few look at the tax treatment of this income. Virtually all sources of retirement income are taxed - including 401ks, annuities, tax-sheltered annuities, defined benefit plans, and even Social Security - if you have over $25,000 of income (single) or $32,000 (married).

The good news is that a 2002 IRA contribution can be designated at any time up until the tax deadline. Plus, if you're over 50 years of age, you may now make an extra $500 annual contribution. Another persuasive argument for opening an IRA is the state of the stock market. With the cost of shares falling, now is a really good time to invest.

KEEP TRACK OF VEHICLE MILEAGE
In order to calculate and report your total annual mileage, you'll need a year-end odometer reading, so make a point to jot down the figure on January 1st. Besides reporting your business (travel) mileage on your return, you also must document and reconcile your commuting and personal (non-deductible) mileage - balanced to your total mileage from year to year.

To be on the safe side, get your oil changed near year-end so you'll have a receipt with the vehicle mileage on it. IRS auditors always ask for this to confirm total annual mileage.

SWITCH CREDIT CARDS
Many banks now offer an annual report by category to holders of certain credit cards. With this benefit, you don't have to find, collect, or review every statement at tax time. Consider applying for such a card now and make your year-end organization easier for 2003. An even better suggestion is to maintain a separate credit card account that you only use for deductible expenses.

REVIEW TAX LAW CHANGES
Visit the IRS website www.irs.gov for a list of tax law changes for 2002. Go to the forms and publications section and look up Pub 553. While there isn't much affecting mobile providers this year, there are some considerations that may apply to your situation.

To begin with, the tax rate for most travelers is down another half point to 27 percent. The business (travel) mileage rate increased from 34.5 cents to 36.5 cents per mile. And up to $5,250 of employer-provided education assistance can now be received tax-free for graduate-level courses (for more information, see IRS Pub 970). In addition, the 60-month limit for a student loan interest deduction is gone; but the deduction is phased out if your income is over $65,000. One of the most interesting changes is a $2,000 deduction for the purchase of a gas-electric hybrid vehicle.

ADJUST YOUR W-4
If you are losing a dependent who is moving out, becoming 19, or turning 25 (in the case of students), it is a good idea to start withholding extra tax at the beginning of the year, so you won't come up short next April. Remember, there is an inverse relationship between exemptions and withholding - fewer exemptions result in more tax withheld and vice-versa.

SELL OFF WORTHLESS STOCK
With the status of the market today, you may be holding worthless stock. Consider selling it at a loss before December 31 to offset any other capital gains or ordinary income. This does not include stock held in a retirement account, however, as these transactions do not trigger a tax event. Any capital losses - no limit - offset capital gains first. Up to $3,000 of loss over any capital gains will offset regular wage income. If losses are in excess of $3,000, the remainder rolls over to future years at $3,000 annually.

STRATEGIC ADVICE
When considering year-end tax planning strategies, keep in mind that one size doesn't fit all. Not every recommendation will apply to your situation. If in doubt, consult with a qualified tax expert who can help to keep you in line and off of the IRS radar.