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With the economy in recession, now's the time to save. And a good place to start is on your taxes. Although Congress eliminated most tax shelters and loopholes in 1987, there are still deductions and credits available of particular interest to older taxpayers. Here's a roundup:

Credit for the Elderly or Disabled: You may qualify for this credit if, by the end of 1990, you were age 65 or older or were retired on permanent and total disability and had taxable disability income during the year. Additionally, there are income limitations to consider. Single taxpayers may have no more than $17,500 in adjusted gross income or more than $5,000 in non-taxable Social Security or other non-taxable pensions.The income ceilings are higher for married couples filing jointly and vary depending on whether one or both spouses are elderly or disabled. Call 800-TAX-FORM to request IRS publications 524, "Credit for the Elderly or the Disabled" for details.

Credit for Child and Dependent Care Expenses: If going to work last year meant paying someone else to care for a disabled spouse or a dependent, then you may qualify for this credit. The amount of the credit ranges up to 30 percent of qualified expenses or your total earned income, whichever is less. Qualified expenses include those for care provided in your home or in a day-care center and housekeeping services provided at least in part for the dependent.

Deduction for Medical and Dental Expenses: If you itemize deductions, you can deduct medical and dental expenses that exceed 7.5 percent of your adjusted gross income. Some examples of qualified expenses: insurance premiums for medical and dental care; out-of-pocket payments to doctors, dentists, nurses and hospitals; and payments for prescription drugs, hearing aids and dentures. You may not deduct payments made by your insurance company for medical or dental care.

Older Homeowners Tax Exclusion: If you're age 55 or older and sold a principal residence in 1990, you may claim a once-in-a-lifetime exclusion of up to $125,000 of profit generated by the sale. To qualify, you must have lived in the home for three of the five years preceding the sale. The exclusion is unavailable if you or your spouse used it previously. If you reinvested your profit in a new home to avoid paying taxes, you can claim the exclusion at a later date.

Tax-free IRA Distributions: If you took an IRA distribution in 1990, you do not owe tax on the withdrawal provided your contributions to the IRA were non-deductible, meaning you paid tax on the contributions in the year they were made. If you made both deductible and non-deductible contributions to the IRA, a portion of the distribution is taxable. How much depends on what percentage of your total IRA funds were previously taxed. Suppose, for example, that you had $20,000 in your IRA last year, when you took your first distribution - a sum of $5,000. Suppose also that $4,000 of your original IRA deposits, or 20 percent of your total funds, were non-deductible. You can now use this percentage to prorate your $5,000 distribution: 20 percent, or $1,000, is tax-free. The balance is subject to tax.

QUESTION: I am 65 years old and in good health except for severe headaches. Recently, I had a complete medical and neurological examination. The doctors found nothing wrong and concluded that my headaches were caused by stress. They suggested I attend a stress-management class offered by the hospital. Can stress really cause headaches? How can I better manage stress?

ANSWER: All people experience some degree of stress, the response of the mind and body to physical and emotional events. Change, whether positive or negative, can cause stress.

Doctors and scientists have studied body responses to stress and found that it causes physical discomfort and can be a major cause of illness. The accumulated effects of stress have been linked to ulcers and heart attacks.

When a person experiences stress, his or her nervous system is activated, pumping adrenalin and other chemicals into the bloodstream. Breathing becomes shallow and muscles tense up. If nothing is done to reverse the physical reaction, the body remains in a state of tension.

Symptoms associated with prolonged tension include headaches, hyperventilation, low back pain, dry mouth, heart palpitations, sleeplessness and stomachaches.

Although stress cannot be avoided, it can be managed. Experts agree that identifying stressors and managing their effects can improve health and quality of life. Learn to identify situations causing stress. Remember that it can also be caused by positive events such as moving to a new home, getting married or retiring. Identify your body's symptoms of stress.

Stress-management techniques include assertiveness training, exercise, breathing exercises, meditation, yoga and biofeedback. Consult books and your hospital's health-education department for information on stress management.