Prefer Jury Duty to Filing Taxes? 4 Essential Tips To Make Your Taxes Easier
Tax season started on Jan. 29, and this period can be very stressful and cumbersome for many Americans. Whether it’s the fact of having to compile a lot of documents or the fear of omitting something and ending up owing money, tax season can end up causing a lot of stress and anxiety.
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And the numbers speak for themselves: A new GOBankingRates survey found that a whopping 14% of Americans would rather attend jury duty than do their taxes.
“The finding is funny, but, unfortunately, unsurprising,” said Thomas Savidge, research fellow, American Institute for Economic Research. “While we answer honestly that we’re filing our tax returns honestly and to the best of our knowledge, there still is a lot of uncertainty around filing taxes because the tax code is too complicated. It’s so large that it’s impossible for any one person to know every minute detail about it.”
Yet, experts said that with a bit of preparation, and even by trying to make the process “fun” (or as fun as possible), tax season does not need to be a dreadful annual endeavor.
Plan Ahead
One way to alleviate stress is by planning ahead.
For instance, keep ongoing records and receipts for medical expenses, charitable contributions or work-related expenses, suggested Thomas Jarecki, CFP, KeyBank national director of wealth planning.
“Many financial institutions make this easier with account aggregation. For example, at Key, our customers can link their external bank accounts, loans, credit cards, investment accounts and see all of the financial info in one place,” he said.
In turn, this allows individuals to categorize and label spending throughout the year, and at year-end, generate one spending report with a summary of expenses based on selected categories, such as out-of-pocket medical costs, he added.
Consumer finance expert Kyle Enright, president of Achieve Lending, agreed, saying that you should try to put systems in place to organize your finances throughout the year.
“The challenge of finding all your receipts and income information can be overwhelming if you’re not organized,” he said. “Right after filing, figure out simple ways you can consistently organize your information during the year. You will be much less stressed next year.”
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Make It Fun
Every taxpayer has individual considerations and unique factors to their finances, which can make them a bit fearful and unsure “especially when you hear the horror stories of an IRS [Internal Revenue Service] audit tipping someone’s life upside down,” said Jenny Groberg, CEO and founder of BookSmarts Accounting and Bookkeeping.
And as she added, “the tax deadline never moves, so schedule a date and a time to gather all of your financial information needed.”
“Make it fun by grabbing your favorite drink or ordering take out. If you have a spouse or life partner, make it a date night and do it together so you don’t feel alone. The more you can plan and make it a fun and positive experience, the more likely you will be to not procrastinate,” Groberg said.
Plan For Your Tax Refund or Payment
Achieve’s Enright said that the average income tax refund so far this year is $3,207, according to the IRS. And while it may be fun to fantasize about spending that money on a glamorous purchase or a great vacation, using a refund to repay debt or beef up your emergency savings can feel even better, he added.
“Plan for what you will do with your refund. Alternatively, if you owe taxes, define how you will pay what is due,” he said.
Deciding Whether To Go Alone or Hire a CPA
If you are truly stressed about handling your return, work with a CPA, Enright recommended.
“Large tax-filing firms can help in many if not most situations, and there are many independent CPAs who can work with your particular situation. Again, don’t delay. These professionals are more than busy this time of year,” he said.
He also recommended that you don’t “DIY” your taxes.
“Whether it’s math anxiety or another reason, know that very good, up-to-date, easy-to-use tax preparation software is available,” he said. “You’ll still need to provide your data, but the technology does the heavy lifting for you. You do need to review and sign off on your return before giving the OK to file electronically.”
Another tip, according to Groberg, is to change your perspective on hiring a tax accountant, as they almost always save you more money than they cost, she said.
“They know the ins and outs of the tax laws that are constantly changing,” she added.
For instance, they can easily tell you if you itemize or standardize your taxes.
“They can get creative and ask you questions that even a computer program will not ask. You may have an expense or a deduction that you would have never thought of on your own without a tax expert,” she added.
KeyBank’s Jarecki further argued that the decision depends on how complex one’s tax situation is.
For most Americans, today’s “do-it-yourself” tools — such as Turbo Tax, Tax Slayer, H&R Block — are “super easy to work with,” he said.
He added, however, that self-employed individuals, investors who trade frequently or employees with stock-based compensation –to name just a few — should probably hire a CPA to ensure accuracy, maximum deductions and timely filing.
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This article originally appeared on GOBankingRates.com: Prefer Jury Duty to Filing Taxes? 4 Essential Tips To Make Your Taxes Easier
