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Tax season isn't something most people look forward to, particularly if they suspect they owe money. However, a few tax prep tips can make the process of filing a return and, if necessary, paying back taxes as pain-free as possible.
1. Call your tax preparer early. If you use an accountant or another tax preparer, be sure to book the appointment as soon as possible because slots fill up quickly. You don't want to wait until the last minute and find there are no remaining appointments.
2. Establish a tax preparation folder. Beginning in January, certain documents will arrive in the mail that will be needed to file your taxes. Documents include earnings statements, banking interest statements and documents indicating investment profits. When items arrive, stash them in your tax folder so you'll have all necessary paperwork at the ready.
3. Avoid tax scams. As tax season draws near, tax scammers target unsuspecting individuals. You may find that you receive calls or texts from those purporting to be with the Internal Revenue Service. However, financial experts say that the IRS or the U.S. Treasury will never call you on the phone; their mode of contact is via the U.S. mail. Another scam is individuals advertising a bigger refund when you use their services. This is not how tax laws work nor is it possible to get a return larger than what is owed. Avoid anyone promising a bigger return.
4. Consider increasing health spending account contributions. HSAs are triple tax-advantaged, meaning you get an "above-the-line" deduction for contributing, and the growth in these accounts as well as withdrawals are tax-free if used for qualified health expenses. If you need to lower your tax burden, HSAs may be a safe and legal way to do so.