Conquer Your Biggest Tax Fears With These 3 Strategies

 
  • Whether it’s due to fear, procrastination or waiting on that last bit of information, tax time is stressful. Even though I’m a CPA and former tax preparer, I confess that I dread the process of digging up all our information and organizing it in order to complete our taxes, and I especially dread the verdict of how much we’ll owe. It’s no surprise that nearly one-fourth of all tax returns were filed in the last two weeks of the 2016 tax deadline. The reasons for putting off the process vary, but these are the top three reasons I see people procrastinating and what you can do to overcome that inertia.
 
  • Fear #1: It’s Confusing/Overwhelming 
  • There’s an entire industry built on the fact that taxes are confusing and overwhelming, so you’re not alone. If you’re trying to go it alone despite finding it totally confusing, you could be doing yourself a huge disservice by missing out on potential tax breaks that tax prep software may not identify. If this is your fear, consider hiring a CPA with the PFS designation to at least make sure you’re not missing anything. If you’re still determined to DIY, then read on.Your strategy:  Start by writing a short, step-by-step plan to file. Set a date and time well in advance of the deadline (April 18th this year) when you will start your tax filing. Then try to tackle it a little bit each weekend.
    Start by organizing your documents. Use a tax preparation checklist and make an inventory of the documents you’ve saved. Be sure to check your email and log in to any financial accounts for which you’ve opted to receive electronic statements only and search for the “tax forms” section on your account. Then organize everything into 5 folders, either digitally or physically:
    • Income
    • Charitable contributions
    • Taxes paid
    • Receipts for deductions
    • Miscellaneous
 
  • Fear #2I Might Not Get a Refund 
  • Your strategy:  If you’re afraid you’ll owe, the sooner you know the better. Even if you file your taxes in February or March, that balance isn’t due until the tax filing deadline.  So go ahead and file as early as possible and use the extra time to make a plan to pay what you owe. If it’s more than you can afford, you can contact the IRS to arrange a payment plan or borrow from another source.  Just be sure to compare interest rates to get the lowest possible cost.
  • To compensate for not receiving a refund if you’re used to it, consider taking your typical refund, dividing it by 12, and making that savings automatic each month. Don’t allow yourself to spend that money each year until you’ve filed your taxes and voila! You’ve recreated the experience while making a few extra bucks in interest along the way.
 
  • Fear #3What If I Get Audited 
  • Your strategy: If you still have reason to be concerned about an audit, work with a licensed tax preparer who will agree in writing to provide audit support if one is requested. That’s your best safeguard against doing something that could trigger an audit and makes life much easier on you if you do find yourself needing to justify information on a past return.
  • The bottom line is that while tax time is no fun for anyone, it’s not something you should be afraid of. If you haven’t filed already, get down to it and get it done.
  • Forbes.com
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