As with all matters financial, doing your taxes can be incredibly stressful. Between understanding tax codes and regulations to making sure you have the right paperwork, there are so many components of the process that can unravel. If you experience stress and anxiety, or simply get overwhelmed with this process, you are not alone.
But, there are some time-tested ways to reduce stress when doing your taxes. Let’s explore them below.
#1 – Start with the Right Paperwork
One of the best ways to reduce stress while doing your taxes is to set your paperwork up correctly. This means claiming correctly on your W4, setting aside estimated payments and filing paperwork (if you are self-employed), and ensuring you are entering into the process from an informed point of view. The surest way to avoid surprises (and with them, stress) is to make sure you set your paperwork up correctly and are not over- or under-claiming dependents, exceptions, and more.
#2 – Get Organized Early On
As soon as documents are available, gather and organize them in dedicated folders by year, type of paperwork, and other relevant details. This should include everything from W2s and 1099s to interest reports from banks and investments and any medical bills.
Having a designated location and file structure that you adhere to will help ensure that you know exactly where the paperwork you need is (and, in future years, it’s a great way to cross-check to ensure you’re not missing anything).
Organization is key to avoiding last-minute searches for files or calls to institutions looking for files.
#3 – Breakdown Your Tasks into Manageable Chunks
For some people, dedicating a single day of the year to tax preparation works well. It allows them to devote an entire day to the process without interruption, and doesn’t extend the stress period. For others, the idea of a full day dedicated to doing their taxes only increases stress.
Regardless of which way is preferable to you, breaking down the task of doing your taxes into smaller chunks can be helpful for stress management. This ensures each step gets completed, but with clear breaks built into your schedule.
For example, you could chunk out the task of gathering documents, and within that task, collect W2s, bank statements, health insurance reports, and any other documents you will need to do your taxes. Then, you can chunk out the task of looking into deductions and credits, devoting a period of time to better understanding updates to IRS regulations.
Doing your taxes is a beast of a task, but outlining the steps and core chunks of the process can help you retain a sense of progress without getting overwhelmed.
#4 – Set Yourself Deadlines
There is little more stressful than hustling to file your taxes at the last minute, especially when you’re up against potential late filing fees and late payment penalties.
Setting deadlines ahead of Tax Day will ensure you have time to get everything together, and alleviate some of the pressure that comes with dealing with the IRS. It also means you have time to address any surprises or issues (i.e. a missing document, poor mileage tracking, or dealing with investment income).
You may want to consider setting deadlines throughout the year or even Q4. Some folks benefit from a weekly check-in time, where they sit down and ask themselves about the status of their taxes.
#5 – Take On a Tax Time Mantra or Ritual
While it’s hard not to get caught up in the stress of tax time, it is important to maintain a healthy perspective and get some distance from the issue, even as you’re working on it.
Some individuals benefit from a Tax Time Mantra they can repeat to themselves as they work through their taxes (i.e. “I File Early So That I May Enjoy The Season”, “I Am Not Defined By My Income”, or “I Am Organized and Doing My Part To Stay Ahead of Things). This can range from affirmations that remind you your worth is more than the amount of money you made in the past year, or a reminder of why you are working to stay on top of things this year.
You might also want to consider creating a ritual. This can look like taking five minutes to meditate and get into the mindset of doing your taxes, or taking a walk after working on your taxes to clear your head.
#6 – Work with a Qualified CPA
One of the undercurrents of stress when working on taxes is the concern of a potential audit, errors that could result in fines, or that ominous letter from the IRS.
The only sure way to relieve this stress is to work with a qualified CPA who knows IRS regulations better than the average person.
While a good CPA does come at a cost, it is almost always worth the benefit of having peace of mind that your taxes fit within the ethical guidelines (plus, most people who file with a CPA save significantly more money on their taxes than those who file alone).
#7 – Contain Your Stress (and the Process)
Like all stressful matters, it’s not uncommon for stress around doing your taxes to leak into other areas of your life. Because this is when most people get a 360° view of their financial situation, it can bring up a lot of worry, anxiety, and yes, stress, too!
One thing we always recommend to our clients is to make sure tax stress stays within the boundaries of working on your taxes. This means not getting mad at yourself for going out to dinner when you promised you’d eat in to save money, and not allowing this stress to fetter into unexpected places.
The more you can contain your worries about your taxes to the time in which you are actually doing your taxes, the more freedom of mind you have when you’re not.
#8 – Reward Yourself
You know yourself, and whether you need small incentives in order to keep up the motivation and knock out tasks, or want to do dinner with friends to celebrate being done with taxes, rewards can help combat the inevitable stress of tax time.
Think of it as positive reinforcement—you get an enjoyable experience for doing the hard work of tax preparation.
Some ideas for rewards include treats, self-care (i.e. massage, spa day), time with friends, a nice dinner with your partner, or a new outfit.
#9 – Take Your Lessons Into The Following Year
One of the most important things to do immediately after finishing your taxes is to write down what went awry this year, where the problems reared their ugly heads, and what you wish you had done differently. Many people skip this step, mistakenly thinking they will remember the stresses in the coming year, only to find themselves in remarkably similar situations (a year is a long time to remember specific details of this complicated process).
If you found gathering information on deductions was horrendous to do all at once while gathering your documents, you can designate a time in say, Q2, to do your deduction research. If you had a document show up late and had to submit an amendment to your return, make a note to ensure you have that document before you file.
Make note of what was especially stressful and what seemed to help alleviate the stress. Figuring out your tax process is an individual experience—you may be someone who benefits from one full day of tax prep, or you might be someone who wants to dedicate a few hours every couple of days to keep from getting overwhelmed.
#10 – Maintain Perspective
It’s important to not get so focused on the details that you forget the big picture. Yes, tax season is about fulfilling your civic duty and ensuring you have paid your fare share of taxes, but it’s also an opportunity to look at your financial situation, celebrate investments, and make plans for the future.
Take some time to look at your situation from a large, zoomed out perspective, and celebrate your successes, set financial goals for the future, or document what worked better this year than previous years.
There are many stressors that come up while doing your taxes, from software issues and deadlines to overwhelming paperwork and complicated deductions. But, with the above 10 strategies, you can avoid the emotional pitfalls of tax season, reduce tears and anger, and empower yourself to take on tax season with confidence. Like most things in life, preparation, organization, and the help of an expert is key to conquering your taxes without all the stress.
