Last month, in our December 2016 newsletter, we discussed how to make January less taxing. Now, 2016 is behind us. This month, we continue the theme of making 2017 less stressful, closing 2016, and looking towards the future by addressing the first and most critical step - getting your tax return prepared and filed.
Many of us procrastinate, put off, delay, and otherwise ignore distasteful and stressful tasks. It has been suggested that any dealings with the Internal Revenue Service, especially the filing of tax returns, are some of the most nerve-racking and traumatic activities a person can face. The sheer thought of dealing with the IRS can raise blood pressure and cause anxiety. The sad truth is that putting off dealing with taxes doesn't make them go away. It doesn't make them any easier to file, and it doesn't make the situation less stressful. Indeed, delaying filing your taxes is likely to cause increased physical and psychological discomfort, not to mention making it more difficult, time consuming and far less efficient.
But help is available! Your tax preparer is here to make your life as easy as possible, and your tax preparer actually LIKES to do the work. Hard as it is to believe, this is a chosen vocation for some; not a reviled chore. So as much as you loath the task, your tax preparer wants to take it on, get it done and free you up to do what you do best - manage your practice. All you have to do is provide information that's asked of you!
Here are some suggestions that will make your life easier and possibly save you money, too:
- For your individual return, look at the tax organizer that your tax preparer sends you. It has all the information you need in order to gather together the documents necessary to file your return. It's a good checklist that takes out the guesswork. After you've received all the documents you think you need, return the organizer and your tax documents to your tax preparer as soon as possible to get the ball rolling. Remember, the sooner you get this done, the less likely you are to misplace important documents or forget pertinent information needed to get your taxes filed.
- For business returns, look at the checklist or year-end letter you've received from your tax preparer and complete the tasks. Delegate whenever possible, but check off each item on the list and provide the information to your tax preparer as soon as possible.
Now, for the time-being, your work is done. Sit back, knowing you did all you could, and let your tax preparer get to work. Questions will arise, but if handled and answered quickly, stress and anxiety is mitigated. Put the ball back in your tax preparer's court. Get questions off your desk and out of your life. The benefit of overcoming procrastination and getting information to your tax preparer in a timely fashion can give you peace of mind, a feeling of strength and purpose, and a healthy feeling of being in charge. You will experience increased personal freedom and best of all, the liberty to move ahead and look towards the future.
And therein lies the reward: you are now free and emotionally unencumbered to look ahead, to know you have good numbers with which to budget and plan, there are no questions and trepidations on how much you may or may not need to pay Uncle Sam eliminating the uncertainty of an unexpected outflow of cash. The specter of taxes, the IRS, and looking towards the past rather than the future is behind you. You will breathe easier. Just try it and see!
However, if the intangible, yet ethereal, qualities of getting your taxes out of the way aren't enough, then how about the monetary benefits?
- Looking at your organizer and gathering the documents it lists, or providing the business information requested by your tax preparer in a timely manner likely will reduce the cost of your tax preparation. Never forget that time is money. You pay for the time your tax preparer has to spend calling you, chasing down information, sending you emails and follow-up emails.
- Your personal taxes must be paid by April 15th whether you file your return or an extension. If you extend, the more accurate your tax payments are, the better. If your tax preparer doesn't have sufficient information to estimate how much you should pay with your extension, you bear the risk of penalties and interest; at the very least, a big, ugly, unexpected tax bill when your extension time runs out. So why not get all your information to your tax preparer before April 15th so that the return can actually be filed? Then it's done and over with.
- Consider income-driven loan repayment plans (student loans, for example) where the payments for one year are determined by the income reported on your prior year tax return. In certain circumstances, your future payments conceivably could go down based on prior year information. The sooner that information is discerned, the sooner your payments can be decreased.
- And what if you are going to get a refund? Wouldn't you like to get it sooner rather than later?
Lastly, from a karmic point of view, if you own a business that generates a K-1 for owners other than yourself, the longer you drag your feet on getting your business return prepared, the longer they have to wait for their K-1. This causes innocent parties to delay in their own personal filing, with all the stresses and inconveniences that go along with it.
Stress reduction, potential monetary benefits, and the subsequent positive energy to look towards the future. Who knew that getting your taxes done could make you feel so good?