Tom O’Saben has seen plenty of angst from clients in his more than 30 years as a tax practitioner. “They’re holding their breath as to the outcome," O'Saben, the director of tax content and government relations for the National Association of Tax Professionals, tells Yahoo Life. "They don’t know whether or not they are going to owe [money] or if they are going to get money back or, if they are going to get money back, how much they are going to get." People are also worried about making mistakes, because they are afraid of the IRS.
Part of this uncertainty stems from how complicated the U.S. tax system is and that it can change every year. “Tax code can be very, very confusing, and I think that is the entryway into people feeling stressed out about what will happen with their taxes and around tax season,” Aja Evans, a financial therapist and licensed mental health counselor, tells Yahoo Life.
Because it’s so complicated, the average taxpayer spends 13 hours preparing a tax return and $240 on tax preparation services. For some, the sheer amount of effort required and expense involved create anxiety, which can make people procrastinate. O’Saben cautions against putting off your taxes.
“The number one reason why people have tax season stress is because they aren’t prepared,” he says. “They also, unfortunately, go through the year rather blindly and don’t pay attention to their withholding or lack of withholding [tax].”
Part of being prepared is knowing where to start and how to handle the fear you may feel as a taxpayer. Below are some financial and therapeutic tips to ease the anxiety of tax season.
Stay organized throughout the year. Have a designated place for documents, such as pay stubs and receipts for potentially deductible items. If you are an independent contractor or find it difficult to keep up with your finances, it might be worth hiring a bookkeeper or accountant. “If you can’t afford a bookkeeper, use Mint or an app for keeping track of your expenses,” Rick Kahler, a certified financial planner and certified financial therapist who co-founded the Financial Therapy Association, tells Yahoo Life.
“Don’t wait for tax season to understand what’s going on with your W-2s,” Evans adds. People should double-check to make sure they are withholding enough money each paycheck.
Kahler also encourages people to reach out to experts to verify what they are withholding and not rely solely on their HR department to make this calculation, because every individual’s tax situation is different. Typically, he knows that this can mean using a CPA, “but not everyone needs a CPA, and if a person is employed and doesn’t have a lot of sources of income, [you can] spend $100 or $150 to go to an accounting service and say that I just want to really double-verify that what I’m withholding is enough.” If you’re self-employed, freelancing or working as an independent contractor, it’s even more important to anticipate your tax liability during the year correctly to avoid an unpleasant surprise.
Use a 2-year comparison to get started
The first thing O’Saben does when he meets with a new client is look at last year’s return. “Before you begin the process of filing your 2023 return, take a look at 2022. ... That return from last year contains an outline for you to follow this year,” he says. Look for the commonalities: Are you working at the same job or living in the same place? Then, think about what’s changed: Did you get married or divorced, collect unemployment, add a dependent, sell some investments?
If you’re filing for the first time, that usually means you are young, and young people are more likely to have multiple income streams. O’Saben wants first-time filers to make sure they are recording all their income from the past year and think about any exemptions, especially those related to education, such as tuition, that may apply in their situation.
“Bringing in a professional can really help with that anxiety and overwhelm," Kahler notes. "You don’t have to understand how taxes are calculated. You need the support of someone who does because the tax code is incredibly complicated." Whether it’s a professional such as a CPA or tax-filing software, using an outside resource can ensure that your taxes are filed correctly and that you are getting the biggest benefit from the deductions available to you.
If you can’t or don’t want to spend the money on a professional, “I would strongly advise you to use software because it’s going to eliminate the simple math errors that people make when they are doing a paper-prepared return,” O’Saben says. Also, when you file electronically and opt for direct deposit, you will receive your return much faster than you would receive a check in the mail. If your adjusted gross income is less than $79,000, you qualify for the IRS Free File option, and, even if you don’t qualify, you can still use IRS fillable forms.
Evans also encourages people to research free community resources that may be available in their area. For example, some libraries offer free accounting consultations.
Use stress-relieving techniques
If you’re feeling anxious during the process, take a step back and breathe. “Take a minute to know you have done this before, and you can do it again,” Evans suggests. She also urges people to talk to friends, family members and other loved ones about how they are feeling and ask for support. Kahler also encourages people to use mindfulness meditation and journaling about their anxiety to relieve stress.
Consider seeing a financial therapist
If you have done everything in your control to reduce the burden of tax season and are still feeling anxious and find yourself unable to sleep, waking up in the middle of the night or constantly thinking about taxes, you may want to consider seeking professional support. “That is a perfect signal for perhaps engaging a financial therapist and taking a look at … what’s underneath that [anxiety],” Kahler says. “What is that [anxiety] telling you, because it’s probably popping up in all other areas of life, not just your taxes.”
If you are looking for a financial therapist, both Evans and Kahler suggest using the Financial Therapy Association’s online directory. Also, Kahler notes that many financial therapists offer online counseling sessions, so you should not be deterred from seeking help if there is not a therapist in your area.
After 30 years of helping people prepare their taxes, O’Saben knows filing taxes can be scary, but it doesn’t have to be. “How do we eliminate that fear? We eliminate that fear by being prepared,” he says.