Tax Tip

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: A family senior citizen pays for a practical nurse to keep him clean and help perform everyday functions and exercises. We pay that nurse by check and she withholds her own taxes. Is that deductible as a medical expense?A: Yes. Compensation paid for nursing services can be deducted as a medical expense. "Nursing services" include bathing and grooming as well as administering drugs and medications or changing dressings.

It's income tax season, and again this year The Baltimore Sun and the Maryland Association of Certified Public Accountants are offering readers help on state and federal income tax returns.Association members, all certified public accountants, are answering selected questions until the filing deadline, extended to April 17 this year because April 15 falls on a Saturday.Readers may submit questions by recording them on Sundial. Please be sure to state your question in full. No questions will be answered by phone.

"Small-cap stocks can turn from laggards into leapers," says David L. Babson & Co., investment advisers. "Reasons: strong earnings growth, low P/E ratios, possibility of buyout and dwindling concern over interest rate hikes." It suggests BJ's Wholesale Club Inc., Cable Design Technology Corp., Penton Media Inc. and True North Communications Inc., all on the New York Stock Exchange. TAX TIP: "The best time to sell stock for tax purposes is in the fourth quarter, when you can estimate capital gains and losses," says Roger Lusby, CPA. "Look for stocks with losses to offset estimated gains and ordinary income - up to $3,000 in any one year.

Do you want to improve your 401(k) plan? Here, from Money magazine, November, are suggestions: "Max out. Take a few minutes to make sure you're contributing as much as your plan allows. "Allocate assets. Don't just browse among all those funds without a clear idea of what you need. That's like grocery shopping without a list. "Find index funds. Index funds tend to outperform actively managed funds in the long run, partly because their fees are generally much lower. "Trust the old standbys.

WOULD YOU LIKE more income?"This is a great time for investors to build a position in high-yielding, high-grade preferred stocks," says Richard Young's Intelligence Report. "We see yields in the 8 percent range. Retired, yield-oriented and just plain conservative investors find preferreds a better choice every day. Our favored new issue is Bank One Capital I 8 percent preferred."TAX TIP: Between now and Dec. 31, do not buy any mutual fund until after the fund has declared its year-end capital gain dividend.

Don't miss the last weekend for "Miracle on 34th Street" at Laurel Mill Playhouse, 508 Main St. A special holiday lunch and afternoon matinee is planned for Saturday, Dec. 17 at 2 p.m. Lunch is at noon at Salute Italiano Ristorante, 504 Main St., next door to the theater. Lunch and show for adults is $35, which includes tax and tip; cost for children 10 and under is $25 for lunch, tax and tip and show. Call Maureen Rogers, 301-452-2557, for menu and to make reservations. Other shows are Friday, Dec. 16 and Saturday, Dec. 17 at 8 p.m., with Sunday matinee on Dec. 18 at 2 p.m. Everyone will remember the story from the popular movie, where Kris Kringle, an old man in a retirement home, gets a job working as Santa at Macy's.