Does the phrase ‘tax time’ immediately make your heart race? If so, you are not alone. Even before those dreaded tax forms arrive in the mail, millions of people experience some form of tax anxiety. Anxiety about money can be a constant companion, according to Everyday Health’s 2018 Women’s Wellness Survey. On a weekly basis, around 56 percent of Generation Xers and 62 percent of millennials worry about their financial situation.
Taking steps to educate and familiarise yourself with your tax requirements can make this time of year a little easier, however, it’s still bound to be a little stressful no matter how much you prepare. We spoke with Diana Todd from Balance Tax Accountants, winner of the Institute of Public Accountants’ ‘2020 WA Practice of the Year’ award, to learn more about how to alleviate the additional stress around tax and keep yourself in the ATO’s good books.
1. Assess what you are anxious about.
The most common fears brought about by tax anxiety are lodging your taxes incorrectly, owing money, or the big one: being audited. The first of these is pretty easy to combat. “If you make a mistake, don’t stress! You can always file an amended return,” Diana says. Fears over owing money can also be alleviated somewhat. “If you find yourself owing money in taxes, you can ask the ATO for a payment plan and pay the bill in small, manageable instalments. Create a budget plan, either on your own or with your accountant, and put money aside each week until the balance is paid in full,” Diana advises. The last fear, being audited, is a very uncommon and largely avoidable occurrence. “If there is a valid reason you fear this happening, my advice is to definitely seek the help of a qualified accountant, just to make sure your books are in good order,” says Diana.
2. Accept that filing your own taxes might be beyond your capability.
There are tax preparation specialists for a reason! Depending on the complexity of your personal or business’ finances, you may need to make use of the skills of a registered tax agent. There is absolutely no shame in handing over your tax preparation to the pros; in fact, it may be one of the smartest things you can do. The ATO encourages the use of tax professionals for complex tax matters, and money you invest in using a tax agent’s services is a tax deduction for you.
3. Alter how you think about taxes.
Whether you’re an employee, sole-trader or business owner, filing your tax return shouldn’t be viewed as a punishment. Instead, try to see it as an extension of one of your responsibilities as an employee, or a standard operating procedure for your business. “Completing your taxes correctly and on time can really work in your favour,” Diana says. “It can make all the difference in giving yourself realistic expectations with your cash flow.” Taxes are a real thing and should be planned for in advance, just as you would any other business expenses.
4. Create an action plan that works for you.
There’s nothing worse than feeling like you are always behind. Tax deadlines are set and don’t change, so mark them in your diary and work to create a routine that makes keeping your business numbers up-to-date a breeze. “Sign up for an easy-to-use accounting software,” says Diana. “Setting yourself one goal for the day or week can do wonders to reduce your stress and anxiety over any overwhelming task, so learn to do the same with your finances.”
5. Work on it.
Reflect and identify the one thing that causes you the most stress in the lead up to filing your taxes and having your finances organised. Is it because you’ve put off reconciling your receipts with your bank account statements, you’re not using an accounting program to store all your financial information, or you’re not regularly documenting your sales and expenses? “Identifying what causes you the most stress at tax time gives you the opportunity to do it better next year,” says Diana. “When you work good money habits into your routine, managing your finances will become second nature for you, and you will love how stress-free you’ll feel having your financials in order and ready to go come tax time!”
Filing taxes and managing your finances year-round doesn’t have to be hard, and most importantly, shouldn’t cause you undue stress. If you can, make use of a regular bookkeeper or an accountant to stay up-to-date with your taxes. To further reduce your tax anxiety, or financial anxiety in general, check out Balance Tax Accountants’ Instagram. They bring regular business money tips directly to you via their posts and stories, helping to make you feel seen, heard, understood, and in control of your numbers.