Taxes and stress – tips to manage both!

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Tax season can be a dreaded time of year for many of us. As we run around finding tax slips and receipts and wondering what we might owe, our stress and anxiety levels may quickly rise. The American Psychological Association states that money is the top source of stress among adults and filing taxes is the most stressful money issue of all. Why does tax time cause so much anxiety? There are a few theories, including:

• Fear of incorrect filing.  Even the most mathematically gifted among us worry about errors, omissions and incorrect deductions. Knowing what and what not to claim is enough to cause heart palpitations. Add the fear of penalties or an audit and it is understandable why so many of us dread tax time.

• Time constraints. There are penalties for late filings so many of us scramble to get our forms completed and submitted by the deadline, adding more stress to our daily lives.

• Concern over what we owe. There is nothing like a big tax bill – or the fear of one – to increase our anxiety levels.

• Frustrations of filing. Gathering all of our documentation, spending time methodically completing forms, checking government sites to see what we can or cannot deduct, and not knowing if we are doing things correctly can make anyone’s blood pressure rise!

• Turmoil at home. If partners are not on the same financial page, this can cause arguments and stress. Resentment and frustrations about household finances can intensify as last year’s financial records are reviewed.

Here are a few tips to help you better manage the stress of tax time.

• Begin early. Do not procrastinate. The sooner you get started, the more time you will have to check the details. Besides, the sooner you get your taxes done, the sooner you will feel better.

• Get organized. Not knowing where your invoices, tax slips, receipts, bank statements or other important documentation are can turn your free time into a frantic search party. Getting organized can be as simple as buying an accordion file to store financial information.

• Break the task up. Do not spend hours and hours at one time poring over paperwork. This will cause both mental and physical fatigue and increase your existing stress. Instead, spread it out over shorter periods and remember to take regular breaks.

• Pay attention to your physical and mental health. Eating a healthy diet, getting plenty of exercise and sleep are even more important during stressful times. Going out for brisk walk may be the last thing you feel like doing, but it may be the most helpful thing you can do for your peace of mind.

• Face the situation. If you owe back taxes, make an arrangement with the tax authorities to pay what you can. Ignoring the problem and hoping that it will go away not only increases the amount you owe, but also increases the chances of the government taking action.

• Consult an expert. If it is in your budget, hiring a professional to do your taxes can take a big load off your mind – and potentially save you hours of frustration. You can also seek advice and have your questions about taxes answered by a financial expert through your Employee and Family Assistance Program (EFAP).

Because taxes influence every aspect of your finances, you need a coordinated effort to ensure you pay the least tax possible. The best way to do that is through a complete financial plan, prepared with the help of professional advice. If you are finding it difficult to cope or need financial advice, contact your EFAP. A trusted financial advisor can help you to plan your taxes.