Tax Strategies & Credits

6 Ways to Make Tax Time Less Stressful

by
Lee Reams II
on
11/1/2015
6 Ways to Make Tax Time Less Stressful

Tax time will be here before we know it—a fact that many people have different sentiments about. If you plan on receiving a nice refund check, you're probably looking forward to filing. But if you're like the 20% of Americans who end up owing taxes after filing, you might be feeling a little uneasy. Regardless of whether you plan on owing or being owed, the fact remains that tax season can be a stressful time for working Americans. With constant changes to tax codes, seemingly endless amounts of paperwork to be filled out, and money to be accounted for, it's no wonder so many people dread tax time. If you fall into that category, the good news is that there are some steps you can take to make tax time less stressful.

Choose the Right Withholding Amount

If you're unpleasantly surprised by how much you owe after filing every year, your tax withholding status is probably not doing you any favors. W-2 employees are required to fill out a W-4 form, which allows them to claim exemptions on their tax withholdings. If you're currently claiming exemptions on this form, yet continue to owe money in taxes year after year, your employer may not be withholding enough in taxes from your paychecks. A simple way to fix this is to speak with your tax accountant or HR and request to fill out a new W-4 form with fewer or zero exemptions. Keep in mind that your paychecks will decrease, but you may find yourself breaking even or receiving a refund the following tax year.

Improve Your Organization

Those with complicated tax situations—such as the self-employed or even small business owners—often experience stress when it comes to keeping track of expenses, revenue, and other documentation throughout the year. At the same time, accuracy is key when reporting your income, losses, and other pertinent information on your taxes; so if you find yourself stressing out by trying to locate paperwork, statements, and other materials year after year, it might be time to up your organization. This could mean something as simple as investing in a file cabinet for your office to even hiring a remote bookkeeper to assist you with organization and documentation tasks.

Save Every. Single. Receipt.

If you plan on taking any kind of deduction or claiming a credit on your taxes this year, it's in your best interest to begin saving receipts. All too often, people think it will be easy to simply locate an electronic version of the receipt when tax time rolls around, only to find that this isn't the case. Any time you get a receipt for something that could be used as a tax deduction (such as business-related equipment or even a new Energy Star appliance), file it away and save an electronic version of it. You'll thank yourself when it comes time to prepare your taxes.

Get Started as Early as Possible

Procrastination is one of the most common sources of stress come tax time. This is especially true for those who anticipate owing money to the IRS; they put off preparing and filing their taxes so they can put off paying the money they owe. However, all this is going to do is cause more stress in the long run. While it is possible to file an extension if you cannot get your taxes done by April, you'll still be responsible for paying what you owe before then; otherwise, be prepared to pay interest, penalties, and fees.

No matter what your tax situation, it's in your best interest to get started on filing your taxes as soon as possible. For most workers, this means starting as soon as you receive all your W-2s or 1099s. The sooner you get started, the more time you'll have to resolve problems (such as inaccuracies on your W-2) and make sure everything is accurate before you file. As a result, you'll avoid the stress of worrying about an audit or having your return rejected.

Explore Payment Plan Options

If you think you're going to owe money to the IRS this year, make yourself aware of payment plan options available by the IRS. All too often, people who owe money panic and stress out because they have no feasible way of paying the money they owe. As a result, they do nothing because they're essentially frozen by their fear. Down the road, these same people may have their wages garnished or action brought against them by the IRS due to back taxes owed.

All of this stress and hardship can be avoided, however, by simply working with the IRS to come up with a reasonable payment plan for the money you owe. Believe it or not, the IRS is actually very easy to work with in this regard and is generally happy to work with taxpayers to establish comfortable re-payment plans, especially for those who owe less than $10,000.

Consult With a Tax professional

Perhaps one of the best things you can do to cut down on your stress dramatically come tax season is to simply have your return prepared and filed by an experienced tax professional. These days, the availability of tax preparation software leaves many people feeling that they can easily prepare and file their own taxes—and for extremely simple tax situations, this may be true. However, for those who want to make sure they're taking advantage of all the deductions, exemptions, and credits they're eligible for, the best thing to do is to consult with a tax professional. This not only saves you the time and hassle of preparing your own return, but gives you added peace of mind that your return was completed accurately and that you're backed in the event of an audit.

These are just a few simple steps that all taxpayers can take to make tax season a little less stressful. From there, you can stop dreading April and possibly even start looking forward to it instead!

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Lee Reams II

Lee Reams II

CEO

I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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