You may experience one tax season at the beginning of each year (like now!), multiple tax seasons throughout the year, or the entire year could be one long tax season, like it is for many entrepreneurs and business owners. Regardless of your specific situation, each time you enter into a tax season, you probably experience some associated pain, in the form of stress, tension, and maybe even anxiety.
“…income tax season is the most dreaded time of the year for the average working adult. Headaches, heart palpitations, and anxiety plague many people as they worry about their tax returns…The American Psychological Association states money is the top source of stress among adults; and for the majority of people, money stress is triggered by filing taxes.”
“…recent Stress in America survey found that money is a top source of stress for adults. Sixty-nine percent of people attribute their stress to money and 65 percent report that work is a cause of stress, interrelated issues that are emphasized for many during the tax-filing process.”
The good news is that it’s possible to alleviate tax season pain, if we’re aware of its source and put a plan in place to alleviate it.
The Source of Tax Pain
Through my own experience, which has ranged from being an employee to running multiple businesses, many times simultaneously, while serving multiple clients, and at the same time managing the day-to-day finances of a household, I’ve found that the pain of tax season is usually caused by how we handle our actions related to doing what we know what we need to do throughout the year to be prepared for tax season.
Most of us actually do know what we need to do to be prepared for tax season. At least, in theory, it’s pretty simple, right? We need to –
- Collect all of our tax information.
- Identify the governmental entities, e.g. local, state and federal, that we need to pay.
- Complete the forms for each governmental entity, using the information we’ve collected.
- Give ourselves enough time to do these things in advance, so that we don’t rush and make mistakes, in order to file by a specific date.
Even though we know what we need to do and when we need to do it by, we still end-up making mistakes. According to US News and World Report, two of the most common tax mistakes people make are forgetting to file all of the required forms and failing to keep paperwork organized. Forbes suggests that when it comes to taxes we should, “Slow down. Most mistakes happen because taxpayers are rushing to get returns done.”
So why, year after year, if we know what we need to do to be prepared for tax season, what some of the most common mistakes are, and that giving ourselves enough time helps us avoid these mistakes, do we find ourselves –
- Scrambling around at the last minute, hoping to collect all the information we need, while not forgetting anything along the way.
- Then quickly filling out the required forms, or packaging all the information we’ve managed to collect and haphazardly dumping the information on our accountants, to have them make sense of it all, maybe even at the last minute…you’d never do that to your accountant now, would you…? 😉
- Experiencing the related pain build, as some combination of stress, tension and anxiety, as the result of doing things under a time crunch, with an unyielding deadline (yes, you can file an extension, however it’s going to cost you), and the fear that you might have forgotten a key piece information (how about all those donations you made throughout the year…?), which might result in costly mistakes.
To me, the primary source of this tax season pain is that we don’t actually do what we know we need to do throughout the year to be prepared for tax season. – Christopher Remus
The reality is that we all lead busy lives, have many competing priorities and according to a recent Pew Research Center study, more than half of us either dislike or actually hate doing taxes. Curiously-enough, the same study also states that 34% of us either like or love doing taxes, although I can’t say I’ve ever met any of these people
Additionally, if you fall into the category of people, as I do, who end-up having to pay taxes every year, there might be something in your subconscious working, to delay the reality of having to come face-to-face with how much of your hard-earned money isn’t really yours, since you’ve just been holding on to it for Uncle Sam, your state government and in my case New York City as well.
Alleviating Tax Season Pain
So, now that we’re aware of the source of tax season pain, how do we alleviate it? How do we make sure we actually do what we need to do, when we need to do it, to make tax time less painful, by being better prepared?
The answer is to put a simple system in place that makes it easier for us to do what we need to do by
- Establishing a single digital repository as the destination for all the information we need to collect.
- Automating the parts of the tax information collection process that we are able to automate, so that we don’t have to manually do some things.
- Making it easy for us to manually do what we can’t automate, so that we actually do these things.
If you put a system in place that follows these three principles, you’ll find that you’ll be be better prepared once tax season rolls around and the pain of each tax season become greatly reduced as a result. Now, all the information you need will be in a single place and ready for you when you need it. You can now spend the time you used to spend running around collecting everything at the last minute on more important things, such as
- Making sure all of the information you need to maximize your deductions are accounted for in the repository.
- Carefully thinking through the decisions you may need to make related to tax planning
In Part 2 of this series, I’ll discuss each of the three aspects of this Tax Pain Relief system in greater detail, to help you put your own system in place to alleviate the pain of tax season.
About the author: Christopher Remus
Chris used to really dread collecting all the information needed to file taxes. Since he was spending way too much time collecting various tax forms, bank statements, receipts, etc., this would lead to him being super-stressed and behind on a lot of other important things during tax season.Over the past few years, Chris developed Tax Pain Relief to make the tax information collection process a lot easier and better for himself and is now excited to share that relief with others.