How to handle tax anxiety: 7 tips to manage your filing stress
Clinically reviewed by Dr. Chris Mosunic, PhD, RD, CDCES, MBA
Explore what tax anxiety, or tax-iety, is including its common causes. Plus, how to handle the stress of filing taxes and deal with anxiety after you file.
Most of us dread tax season. For many people, the complicated process of filing taxes brings on many feelings, including stress, anxiety, and sheer worry. “Tax anxiety” is common and is triggered by the fear of making errors, the complexity of tax laws, owing additional money, and facing potential audits.
What is tax anxiety, or tax-iety?
Tax anxiety, or "tax-iety," is a form of stress specifically related to dealing with taxes and finances. The roots of tax anxiety are deeply intertwined with the fear of the unknown and the perceived difficulty of tax rules and regulations. The terminology used in tax forms can be confusing, and the fear of not understanding something important or making a costly mistake can be overwhelming.
This kind of stress is particularly more common as the tax filing deadline approaches, which often leads to heightened worry and concern. For those of us with fluctuating incomes, such as freelancers or small business owners, this stress is compounded by the unpredictability of our tax obligations. The possibility of owing more than expected, or dealing with penalties for errors or late submissions, can also contribute significantly to tax anxiety.
Understanding tax anxiety is the first step toward finding practical strategies for managing it. Acknowledging that it is a common experience shared by many different people can help alleviate some of the stress and isolation we feel during the tax season.
5 causes of tax anxiety
Tax anxiety can be triggered by several factors, each contributing to the stress experienced during tax season. Understanding these causes can help you identify and address the specific sources of your anxiety.
Tax laws can be complex and hard to understand. This can make filing taxes seem daunting. Many people feel unprepared and overwhelmed by the details required in tax preparation.
Previous negative experiences with filing: If you've encountered problems with the IRS in the past, such as owing a large bill, facing penalties, or undergoing an audit, you might naturally feel more anxious about repeating the process.
Procrastination: Delaying tax preparation can significantly increase stress levels. As the deadline approaches, the rush to gather documents and fill out forms accurately can lead to mistakes and heightened anxiety.
Fear of owing money or being audited: Owing money to the IRS can lead to financial strain, especially if it's unexpected. Similarly, the thought of being audited, which might not only involve financial damages but also a detailed and invasive examination of personal financial history, can be very stressful.
Inconsistent or unpredictable income: For freelancers, entrepreneurs, or those on a variable income, estimating taxes can be particularly stressful. The uncertainty of how much to pay and the potential for owing more than expected can cause significant anxiety.
How to handle tax anxiety: 7 tips
While filing taxes is necessary, we can learn to manage our anxiety about them and feel more in control.
1. Start early to reduce overall pressure
Begin preparing for your taxes well in advance of the deadline. This gives you ample time to gather all necessary documents, such as receipts, previous tax returns, and forms related to income or deductions. Starting early reduces the pressure and last-minute rush that can lead to mistakes and increased anxiety.
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2. Keep what you need at your fingertips, year-round
Develop a system to keep all your tax-related documents in one place throughout the year. This might involve a physical file or a digital folder where you can store receipts, donation records, and any other relevant paperwork. An organized system minimizes the chaos and stress of finding documents at tax time.
3. Look for recommendations for reliable tax software
Many people find that using tax preparation software helps simplify the tax filing process. These programs can guide you through each step, ensure you're taking advantage of all applicable deductions, and help prevent common errors. If you're unsure about which software to use, look for reviews or ask for recommendations from trusted sources.
4. Hire professional help to avoid feelings of overwhelm
If the thought of handling your taxes is too overwhelming, consider hiring a tax professional. Accountants and tax preparers are knowledgeable about current tax laws and can offer advice tailored to your financial situation. This can be especially valuable if you have complex tax needs, such as owning a business or having multiple income streams.
5. Demystify the process by educating yourself on the basics
Understanding the basics of how taxes work can demystify the process and reduce your anxiety. Many resources are available online, including IRS publications and educational websites, that explain different aspects of the tax system in straightforward terms.
6. Set aside a percentage of income for taxes
If you are self-employed or don't have taxes withheld from your paycheck, it's important to set aside money regularly for taxes. Doing so prevents the stress of not having enough funds for when tax payments are due.
7. Invest time in stress-reduction techniques
Tax time can be stressful, so incorporating stress-management techniques such as deep breathing, exercise, or meditation can help keep your anxiety in check.
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7 ways to manage anxiety after filing taxes
Even after you’ve filed your taxes, you may find yourself caught up in residual anxiety — especially if you're waiting to see if everything was filed correctly or if you might owe more than expected. These practical strategies can support you to manage this anxiety and stay calm during the post-filing period.
1. Stay informed about the tax return process so you know what to expect: Familiarize yourself with the typical timelines for tax processing and understand how and when you will receive any refunds or notices. The IRS website offers resources where you can track the status of your return, which can provide reassurance that things are proceeding as they should.
2. Track the status of your return to reduce anxieties about delays: Use tools like the IRS's Where's My Refund service to track the progress of your tax return. Tracking not only gives you clarity on the timing of your refund but also confirms that your return has been processed, which can reduce worries about delays or audits.
3. Start planning early for the next tax year to avoid feeling out of control: This might involve adjusting your withholdings if you owed a lot this year, or setting up better record-keeping practices to make next year's process smoother. Taking proactive steps can help you feel more in control and less anxious.
4. Keep a contingency plan to minimize the stress associated with financial uncertainty: If you are worried about owing money, plan how you would handle any potential payments. Knowing your options for payment plans or having savings set aside specifically for tax payments can ease the stress associated with financial uncertainties.
5. Reflect on this year's process and address pain points proactively for next year: Consider what aspects of this year's tax filing caused you the most stress. Identifying these pain points can help you address them before they become issues in the future. For example, if gathering documents last minute was stressful, you might improve your filing system for the coming year.
6. Build positive stress-reduction habits to boost your resilience: Maintaining routines that include stress-reduction techniques like meditation, yoga, or regular exercise can help manage not just tax-related anxiety but overall stress levels throughout the year.
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7. Seek feedback or advice if needed to reduce feelings of dread about next year: If certain aspects of the tax process were confusing or led to mistakes, consider seeking advice from a tax professional. Connecting with specialists can provide clarity and assurance, reducing your anxiety about similar issues in the future.
Tax anxiety FAQs
Why are taxes so stressful?
We find taxes stressful because the tax code is complex and often difficult for many of us to understand fully. This can lead to fear of making mistakes or not maximizing potential returns. Taxes are also associated with financial consequences, including the possibility of owing money, which can be a significant source of anxiety. The strict deadlines imposed for filing taxes add pressure, making the process feel urgent and sometimes overwhelming. Finally, the formal nature of dealing with government agencies and the potential penalties for errors can increase the stress levels associated with tax filing.
How do I know if I need professional help with my taxes?
You might consider seeking professional help with your taxes if you consistently find the process confusing or stressful. Also, if you have experienced significant changes in your financial situation — like starting a business, buying a home, or receiving an inheritance — or if you need to correct previously filed returns. When your tax situation involves multiple income sources, large investments, or complex deductions, a tax professional can provide clear guidance and ensure that your taxes are filed correctly, potentially saving you money and a lot of stress.
Can meditation or mindfulness help manage tax anxiety?
Yes, meditation and mindfulness are effective tools for managing any form of stress, including tax anxiety. These practices help by focusing your mind on the present moment and reducing any tendency to worry about past or future events. Regular meditation can lower general anxiety levels, improve your mood, and enhance your concentration and decision-making skills, which are all beneficial when handling complex tasks like tax preparation.
How do I deal with the fear of being audited?
First of all, it’s important to know that tax audits are rare. However, ensuring you’re prepared in case it does happen can help you deal with the fear of an audit. Audits do not always imply wrongdoing as they are sometimes conducted randomly or triggered by discrepancies that are often simple to explain. To reduce audit anxiety, make sure to keep accurate and thorough records of all income, deductions, and credits. Good record-keeping can provide peace of mind and make it easier to respond if the IRS contacts you. Also, remember that most audits are conducted through mail and involve clarifying questions or requests for additional documentation rather than full-blown investigations.
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