Updated: May 9
Taxes can be stressful for a variety of reasons, including the complexity of the tax code, fear of making mistakes, and the fear of owing money to the government. Now that tax season is (mostly) over, I wanted to recap the challenges that I saw therapists experience and how we can better plan for next year.
1. Keep accurate records throughout the year
One of the best ways to reduce stress during tax season is to keep accurate records throughout the year. This includes tracking all your income and expenses, saving receipts, and staying up-to-date on any tax law changes. Using an accounting system such as QuickBooks will make it easier for you to organize your records and be better prepared for taxes.
2. Estimate your tax liability early Estimating your tax liability early can help you to plan and budget for your tax bill. You can use the IRS Tax Withholding Estimator to estimate your tax liability and make adjustments to your tax withholding or estimated tax payments if needed.
This tool works if you are subject to withholding (ie, you receive W-2 income or have a spouse that you file jointly with that will have W-2 income).
If you are self employed and that is your only source of income, I recommend saving 20-30% of your income.
3. File early
Filing your taxes early can reduce stress by giving you more time to gather any missing documents, fix any errors, or address any issues that may arise. You really don't want to rush it. Seeking professional help can help you to accurately prepare your taxes and avoid making mistakes. They can help you to identify deductions and credits you may have missed and provide expert advice and guidance.
Plan for next year Finally, it's important to plan for next year's taxes. This includes estimating your tax liability early, making any necessary adjustments to your tax withholding or estimated tax payments, and continuing to keep accurate records throughout the year.
By taking these steps, you can reduce stress during tax season and ensure that you are prepared for next year's taxes.
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