(MONEY Magazine) – To you, a birthday might be just another reminder that you're getting on in years. But to the IRS, your birthday--or half-birthday--can be a reason for the agency to crash your party and either give a tax present or clip you. Here are the key birthdays in your tax life and how you can squeeze the greatest possible savings out of each. With some advance planning, you can enjoy all your birthday parties, without any tax surprises:

--Birth. Starting in the year your child is born or legally adopted, you can deduct him or her as a dependent. The exemption amount--$2,650 in 1997--works out to a tidy tax savings of $742 per child for parents in the 28% bracket (taxable income of $41,200 to $99,600 if you're married and filing jointly; $33,500 to $85,350 for a head of household, a special filing status for unmarried taxpayers with dependents).

But this write-off isn't automatic: Beginning with your '97 return, you must have a Social Security number for every dependent--including a newborn--to claim the exemption. In the past, if you didn't have a Social Security number for a dependent, you could write "applied for" on the tax form. Now, however, if the number is missing or incorrect on your return, the IRS will disallow the write-off and slap you with the extra tax and maybe even a $50 fine. So when your baby is born, request a Social Security number at the time you fill out the hospital birth-registration forms.

--Age 13. When your child hits 13, you can no longer turn to Uncle Sam for help in defraying the cost of child care. Before he becomes a teenager, however, working parents can choose between two tax perks to offset day-care costs. For most Money readers, the more valuable one is an employer-provided dependent-care flexible spending account (FSA), which lets you set aside as much as $5,000 of pretax salary to pay day-care bills. For a couple in the 28% bracket, paying $5,000 in day-care expenses from an FSA yields a federal income tax saving of $1,400.

The second one is the dependent-care credit, equal to 20% to 30% of annual day-care expenses of up to $2,400 for one child or $4,800 for two or more kids. The lower your income, the higher your credit percentage. Typically, a couple in the 28% bracket with two kids in day care can collect a maximum tax break of $960.

--Age 14. Until the year your child turns 14, any of his investment income above $1,300 is taxed at your top rate. Once he hits the big 1-4, though, all investment income is taxed at his own, presumably lower, rate. So before your child turns 14, try to invest for him in ways that won't throw off much taxable income, such as no- or low-dividend growth stocks or mutual funds that buy them.

--Age 18, 21 or 25. When you have a bank, brokerage or mutual fund custodial account for your child, the earnings are taxed to your child, but a custodian (you or someone you appoint) controls how the money is invested. However, your state's law--not the custodian--will determine when the assets in the account must be turned over to your kid. Depending on your state, the ages vary from 18 to 21, except in Alaska, California and Nevada, which let you extend the custodianship until age 25.

--Age 55. Starting at 55, you can sell your home and exclude from income as much as $125,000 of the gain. To qualify, the house must be the principal residence where you've lived for at least three of the past five years. This tax break is a once-in-a-lifetime exclusion, so don't squander it: For example, don't claim the goody if your home's gain is modest and you anticipate selling your next one for a larger profit in the future.

The President has proposed eliminating capital-gains tax on home sales for virtually all taxpayers, though. So if you're 55 or older and your gain is more than $125,000, you may be able to garner a bigger tax savings if you put off selling until it's clear whether the proposal will become law--possibly this fall.

Another tax bennie: If you leave your job at 55 or older, you can withdraw the money from your company retirement plan without owing a 10% penalty.

--Age 59 1/2. From now on, you can take money out of your retirement plans without being socked with a 10% penalty--even if you're still working. If you will pull all the money out of your plan, bear in mind that a special tax-cutting tactic for lump-sum withdrawals known as five-year averaging expires on Jan. 1, 2000. This strategy lets you cut the tax on your withdrawal by permitting you to compute your tax as if you'd received the money over five years instead of all at once.

--Age 65. If you do not itemize deductions, you become eligible for a bigger standard deduction in the year you turn 65. In 1997, a single person age 65 or older gets a standard deduction of $5,150; that's $1,000 more than for nonseniors. Married couples can take a standard deduction of $7,700 if one spouse is 65 or older, $8,500 if both are 65 or older--that's $800 and $1,600 more, respectively, than for a younger married couple.

--Age 70 1/2. You face the last great tax tangle of your life as you approach--get this!--April Fool's Day of the year following the year you turn age 70 1/2. That's when you must begin taking annual taxable withdrawals from your retirement plans. Exception: If you are still working after 70 1/2 and have a plan at your current job, you needn't make withdrawals.

The minimum amount you have to take out is based on your life expectancy (or, if you choose, the combined life expectancy of you and your beneficiary) as computed in IRS actuarial tables. Failure to take at least the required minimum will result in a draconian 50% penalty. The upshot: If you must start tapping your stash now, consult a tax pro. After all, if you've managed to shield money from the tax man until your eighth decade, you don't need an unforeseen problem to tarnish your truly golden years.

A tax lawyer and former IRS audit group manager, Mary L. Sprouse has prepared more than 1,500 tax returns.