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NEW YORK (MONEY Magazine) -
Taxes may be inevitable but they don't always have to be painful. Here are four tips to make the dreaded yearly experience a little better.
Reduce your taxable income
Fund a flexible spending account at work. Your boss deducts pretax money from your paycheck, which you then use to pay for medical expenses ranging from insurance deductibles to aspirin to acupuncture. Every $1,000 you put in (you can contribute as much as $5,000 a year) cuts your tax bill by about $300. Sign up in open enrollment every fall.
Cut your losses
Sell a stinky stock or fund. In a taxable account, your losses can offset capital gains and cut your taxes, thus converting a dumb investment into a smart tax break. If you change your mind, you can always buy the fund back.
Donate your shares
Donate stock, not cash, to charity. Not only will you help those in need, you'll forever avoid taxes on any gains on the stock -- and you can deduct the full value of the shares on your tax return. The charity will be happy to help you with the paperwork.
Monetize the spare bedroom
Start a business from your home, however small, and magically, expenses ranging from Internet access to plumbing repairs can become at least partly deductible. There are rules, of course: You have to use your home workspace exclusively for work, among other things. Print out Publication 587 from www.irs.gov for details. Just don't read it when you're tired.
50 Smartest money moves: Intelligent investing
Click here for tax essentials.
Worried about the alternative minimum tax (AMT)? Click here for more information.
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