Stress is like air; it’s everywhere. We all experience stress, but a recent study by the American Psychological Association found that many Americans are reporting higher stress levels than in recent years.
Financial issues are undoubtedly a crucial part of stress. Ohio State University researchers published an article in the Journal of Financial Therapy (yes, there is such a thing) that revealed over 70 percent of college students were stressed from personal finance issues. Whether you’re in college or not, there’s a little bit of college student in all of us; financial issues are stressful. Financial issues like taxes—that annual routine where we begrudgingly confront a vast complex tax code and a vast stack of papers and a vast amount of stress. Given this vastness, there’s a way to make tax planning less stressful. We might have more stressors right now than ever, but tax planning doesn’t need to be one of them. I’ve identified three ways to lift tax stressors from your backs.
Know Your Competencies
I’m asked all the time, “Should I do my own taxes?” The reality of preparing your own taxes is how much you know and how confident you are in dealing with the many intricacies of the tax code. Uncertainty comes from “What if I…?” and “How do I…?” questions and these questions can create a genuine amount of stress. Some things are best left to the professionals. If you get something wrong preparing your own taxes, the financial penalties and implications can snowball. Legendary investor Warren Buffett put it this way, “It’s not how big your circle of competence is, it’s how well defined the parameters are.” Therefore, knowing your limits of understanding our complex tax code and how it best applies to your personal financial situation is a sure way to keep your stress levels in check. In most cases, a financial professional to help prepare your taxes will be a guaranteed stress reducer.
Distinguish Tax Preparation from Tax Planning
If you plan to walk outside Thursday, would you rather know to bring an umbrella for the expected rain or have a reporter let you know it’s raining outside when you got there? Tax planning and tax preparation are like the difference between a reporter and a meteorologist. A reporter tells you what happened, whereas a meteorologist helps you plan for the best possible outcome. Tax preparation is a service to complete and file your state and federal tax returns (it tells you what happened). However, the objective (and a benefit) of tax planning is to optimize your tax situation before you even file your tax returns. This type of planning can optimize your particular tax situation but typically requires thinking forward, which a qualified financial professional can provide. Tax planning can cut stress by optimizing potential tax implications, whether from buying or selling property, opening a business, having a baby, or transitioning to retirement.
Coordinate Comprehensive Tax Solutions with a Team
The feeling of being powerless and overburdened by financial obligations is not uncommon. Financial well-being sprouts from confidence. A premier way to achieve this stress-reducing confidence is by assembling a team of financial professionals like an estate attorney, financial planner, and CPA that coordinate your financial goals and responsibilities with their activities. A team like this offers confidence-boosting, stress-reducing benefits. The best results I’ve seen are delivered through comprehensive financial solutions by a coordinated team of professionals.
Take Positive Action Now To Reduce Tax Stress
While living without the financial stress of taxes completely is an unlikely outcome for any of us, you can take action to reduce it. When you take control of your finances and are confident about it, you’re less likely to feel financially stressed. Go confidently in the direction of your financial dreams and goals. Seek the help of qualified professionals to optimize your particular tax situation for optimal financial wellness.