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Seven Tips to Help Manage Income Tax Stress

Improve your psychology of money to better prepare for tax season.

Key points

  • Tax season has an emotional impact on people regardless of whether they expect to pay income taxes or receive a tax refund.
  • People can use their psychology of money to stop stressing about their income taxes.
  • There are seven simple ways to help manage unwanted stress around tax season.

Every year, Americans scramble to organize their finances, complete their tax forms, and pay their taxes on time. The good news is you can use the psychology of money to cope with the stress of tax season. Through understanding how your thoughts, emotions, and behaviors affect your money decisions, you can minimize stressful feelings and develop strategies to prepare for the tax filing deadline.

How you see your finances directly affects your mental health. Not caring for your mental health could cost you relationships, employment, or even your life. Financial distress accounts for 16 percent of suicides in the US and correlates with lower life satisfaction and higher stress, anxiety, and depression. In addition, financial disagreements are among the strongest predictors of divorce in marriages relative to other common marital disagreements.

Seven Ways to Improve Your Psychology of Money When It Comes to Taxes

  1. Recognize the Emotional Impact of Tax Season
    Many people feel overwhelmed when faced with filing taxes, which can lead to anxiety, guilt, and shame. It can be challenging for those who aren’t aware of their own financial situation. Some people may feel anxious that they won’t have enough money to pay their taxes or are not taking advantage of all the tax deductions and credits they’re entitled to. By taking the time to understand the emotional impact tax filing can have on you, you can be better equipped to manage it.
  2. Notice Unhelpful Habits

    One of the most common unhelpful habits is procrastination. When it comes to taxes, it’s important to get organized and start the process early. Waiting until the last minute will lead to additional stress and an increased chance of making mistakes.

    Worrying constantly about the outcome of your taxes can lead to increased stress levels, causing headaches and insomnia. One study shows that people with anxiety are five times more likely to experience lack of sleep or other sleep disorders. Remember that worrying won’t change the outcome. As you address each unhelpful habit, you can keep your stress levels in check and make the process easier to manage. With the right attitude and approach, you no longer have to dread tax season.

  3. Be Aware of How You Spend and Manage Your Money
    When you become more mindful about how you spend and manage your money, you can develop better habits to stay on top of your finances and reach your financial goals. This can reduce the stress and worry of not knowing how much you need to pay in income taxes and whether you have enough money to do so. Being in control of your financial situation includes having savings available in case you have to pay income taxes.
  4. Be Prepared
    Tax planning is an essential part of financial planning. Take time to review your tax situation regularly. By taking control of your tax situation and understanding the various tax laws, regulations, and filing deadlines that apply to you, you can maximize your tax benefits and reduce your tax burden.
  5. Use the Power of Positive Thinking

    Positive thinking is maintaining a positive attitude and outlook, even when faced with difficult or stressful situations. For example, when financial stress occurs during tax season, you can control its impact by focusing on the positive instead of the negative. In addition, set realistic goals regarding your taxes. Don’t expect to prepare your taxes in an hour while chasing after a two-year-old. When you think positively and set realistic goals, you can stay motivated to reach your goals.

    With positive thinking, you can train your brain to create new neural pathways. As the pathways become stronger, with use, positive thinking can become the new normal. Three ways to shift your thinking from negative to positive are to practice gratitude, act “as if,” and focus on the positive to solve problems. Positive thinking allows you to tap into your intuition and enable conscious problem-solving and decision-making to choose adaptive responses. As a result, you are more resilient when going through stressful events such as tax season.

  6. Cultivate Financial Self-Awareness
    The first step to cultivating financial mindfulness and self-awareness is understanding your own financial situation. This means taking time to look at your income, expenses, and debt so that during tax time, you know precisely where you stand. By understanding your financial situation now, you can plan for the future.
  7. Don't Do It Alone
  • Self-sabotaging behaviors, negative thinking, and not asking for support can cause unnecessary internal stress. Support is critical to holistic success and well-being emotionally, socially, professionally, spiritually, and financially. Without supported and connected relationships, we risk developing mental health conditions such as depression, anxiety, substance abuse, or addiction.

Not only can accessing support help you with any financial stress, but it can also improve your overall well-being. Utilize financial support and resources whether you file your taxes on your own or hire a tax professional to do them for you. The IRS offers taxpayers many free online tools and resources. The IRS also offers free basic tax return preparation to qualified individuals.

Using Psychology of Money to Your Advantage

Money, while a necessary part of life, can also be a source of stress and anxiety. However, by understanding the psychology of money, it is possible to take steps to manage the stress surrounding tax season. Ultimately, by understanding how our thoughts, emotions, and behaviors affect our money decisions, we can take steps to reduce the stress and anxiety associated with tax season as we are more mindful and intentional about our finances.

Studio Romantic
Source: Studio Romantic


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