Every year, the government seems to offer more tax incentives to save and invest. And this year, you might even have some extra money to do it with.

Tax refunds are unexpectedly high, thanks to the new tax credits and deductions for 1998. So far, they're averaging $1,729 up 15.5 percent from last year at this time. You might roll that check right into a retirement account.

Here's what's new on your '98 returns:

? The Roth Individual Retirement Account. You fund Roth IRAs with after-tax money. If you meet all the rules, the gains on this money will pass entirely tax-free.

From a tax-preparation point of view, Roths can be a blessing or a pain, depending on whether you've started one from scratch or converted an old, traditional IRA into a Roth.

(1) A new Roth: This lovely thing doesn't even have to be reported on your income-tax return. You can fund a 1998 Roth with as much as $2,000, right up to the due date of your return (plus any extensions you file for).

There are income limits. You get the full contribution if you're married, with an adjusted gross income up to $150,000; or single, up to $95,000. The contribution phases out at $160,000 for couples and $110,000 for singles.

If your child has earnings but can't afford a Roth, consider funding one for him or her. You simply open the Roth and make the deposit in the child's name.

(2) Converting a traditional IRA into a Roth: You're eligible if your income doesn't exceed $100,000, married or single. But there are tax consequences that you might not have thought of.

Your traditional IRA becomes taxable income when converted to a Roth. If you converted last year, you can spread that income over four years, to reduce the annual tax bite. So 25 percent of the income is taxable on your '98 return.

Before converting, you probably checked to see if the tax-exempt gain was worth its upfront cost. Often, it is.

But did your analysis cover what four years of added income would do to the size of your child credit, education credit, personal exemptions, itemized deductions, medical deductions or the amount of your Social Security payments subject to tax?

If you now discover that the tax hit isn't worth it, you can switch your Roth back into a traditional IRA any time between now and the due date of your return, including filing extensions. No penalty will be assessed.

? More access to traditional, tax-deductible IRAs. IRAs are normally for employees who don't have company retirement plans. But you can have a plan and still contribute to an IRA, if your income falls below certain limits.

Last year, those income limits rose. Couples filing jointly can contribute as much as $2,000 each, with adjusted gross incomes up to $50,000 (phasing out at $60,000), and singles, with incomes up to $30,000 (phasing out at $40,000).

IRAs can be started anytime up to April 15 and still be deducted on your 1998 return.

? More IRA freedom for a spouse. Formerly, a person with no company retirement plan was denied an IRA deduction, if his or her spouse worked for a company with a plan and their joint income exceeded $50,000.

Now, you're allowed the full deduction as long as you file jointly and your adjusted gross income doesn't exceed $150,000. Between $150,000 and $160,000, your IRA deduction phases out.

? More freedom to use IRA money. Normally, you pay a 10 percent tax penalty for money withdrawn from an IRA before you reach 59 & #733;. Since last year, the penalty has been waived if you took any money for higher education expenses, or took up to $10,000 to buy your first home.

But you still owe income taxes on withdrawals, and lose the value of tax-deferred saving.

? A better deal on capital gains. This affects not only holders of individual stocks and bonds but also mutual-fund investors with accounts outside of retirement plans.

Congress shortened the length of time you have to own your investment, to qualify for the low capital-gains rates. You now hold for just 12 months or more, compared with 18 months formerly.

The rates: 10 percent, if your gain falls into the 15 percent bracket, and 20 percent in the higher brackets. On financial investments held for 12 months or less, you're taxed at your ordinary income rate.

Housekeeping changes

The No. 1 housekeeping change in your federal tax return this year applies to your Social Security number.

This number used to be printed on the address label that comes in the mail with your tax-instruction booklet. You peel off the label and stick it on your tax return, before sending it back.

Some taxpayers complained about exposing their Social Security number to the world. So this year, it's not there. Instead, you have to write the number on the form yourself, as well as your spouse's number if you're filing jointly. You also need a number for every dependent claimed.

Inevitably, some people will forget. In that case, expect to hear from the IRS.

The IRS also wants your daytime phone number this year. That's part of its new, consumer-friendly face. It may call you, to resolve tax processing questions for example, missing information and tax schedules.

Some other housekeeping changes:

? Average prices rose so little last year (only 1.7 percent), that tax thresholds linked to inflation rose very little, too. Here's what's higher, on your 1998 returns:

(1) Standard deduction. Use it, if your itemized deductions wouldn't exceed the standard amount. Singles get $4,250; couples filing jointly, $7,100; and heads of households, $6,250. There are higher deductions for people 65 and older, and the blind.

(2) Personal exemptions. You can deduct $2,700 for yourself and every person you claim as a dependent on your return. Exemptions phase out for higher-income people.

The rules are different, however, if your child (or any other dependent) files a tax return of his or her own. The dependent cannot claim a personal exemption, too.

(3) Itemized deductions. If your adjusted gross income exceeds $124,500, married or single, you can't claim certain itemized deductions in full. This haircut affects your deductions for various kinds of state and local taxes, home mortgage interest, charitable gifts, job expenses and most miscellaneous deductions.

(4) Earned income credit. Low-income people with wages get a tax credit. ("Wages" includes disability benefits, paid under an employer's disability retirement plan up to the plan's minimum retirement age.) If you owe no taxes, you get the credit in the form of a government check.

You get the credit if you earned less than $30,095 and have more than one child; $26,473 for one child; and $10,030 with no child. To qualify you for the credit, the child has to have lived with you, in the United States, for more than half of 1998 and meet certain other tests. The credit is paid on a sliding scale.

(5) Social Security. Workers are taxed on wages up to $68,400. This number is linked to the average wage index, and rose 4.6 percent last year. Medicare taxes are paid on total income.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.

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