Fear of Taxes

Fear of Taxes

photo-1427464407917-c817c9a0a6f6It’s that time of year again. Busy season for accountants! The Canadian Personal Income Tax filing deadline of April 30, 2016 is approaching quickly!

I was contemplating why it is still so busy for tax preparers as preparing your own taxes is getting easier every year. The tax software is getting cheaper and cheaper (and you can often find free offerings) and it is fairly straight forward to use.

I’ve been wondering why more people don’t prepare their own taxes. I’ve also been on the receiving end of extreme gratitude when I do prepare people’s taxes. The look of relief on some people’s faces when I tell them makes me feel fairly awesome!

I also know a number of people (many people, so don’t think I’m talking about you) that have not prepared their taxes in years. They owe the Canada Revenue Agency many years of tax returns.

Let me be clear, I’m not talking about complicated tax returns. Sometimes if is very wise to hire out to a specialist. It allows you to concentrate on what you are good at. I’m talking about tax returns for people that are employees and/or have a sole proprietorship small business.

What is stopping people from preparing and filing their income tax return?

Everyone has a slightly different excuse or reason, but I think most of them are based in fear.

One fear is that taxes are too hard to prepare, mistakes will be made and the Canada Revenue Agency will come down with heavy penalties and interest for those mistakes.

Other people worry that they may have made too much money during the year and will owe major taxes.  On the flip side, some people will realize that they did not make very much money at all and may take that as a indicator of their own self worth. Better just to not think about it as thinking about it leads to painful thoughts!

Another concern is that it preparing taxes will be a lot of work. If you own your own business and you haven’t got a system in place that tracks your revenue and expenses (money coming in and money going out) then it can be fairly daunting to to think about compiling a year’s worth of information! I understand that fear. I have some clients that hand me their receipts in a shoe box and I don’t like doing that type of work so much either.  It helps to know that I will get paid.

All these fears stop people from paying attention to a big part of their lives. I’m a firm believer in researching and gathering as much information as possible about things in life. It allows you to make informed decisions, plan better and generally be more successful. If you are burying your head in the sand about your financial situation, it is likely that you are getting yourself stuck and are not as successful as you could be.

So,,, what can you do to get yourself unstuck and start paying attention to your financial situation and taxes?

Well, if it is truly overwhelming, you can hire someone to help you. When choosing an accountant, choose someone that you are comfortable talking to. Ask them to explain what they have done so you could perhaps repeat the process yourself next year or at least start to gain clarity about the process – this often gets rid of fear. Yes, that accountant may charge you by the hour to explain things, but in the long run, you will save yourself lots of money.

I have an even better suggestion though. Why don’t you hire yourself? You would be doing yourself a big favour. Pay yourself to do your taxes. Decide what your time is worth and sit down and tackle those taxes. When you’re done, calculate what you are owed and then go and spend that money on something that is going to make you feel happy. If it makes you happy to put it in the bank account and save it, then do that. That said,  one way to get happier is to have memorable experiences, so maybe you can put those earnings towards a fun experience.

Then next year when it comes time to do taxes again you can look forward to it. It’s an opportunity to earn yourself some funds to do something fun.

By | 2016-11-25T02:24:50+00:00 April 6th, 2016|Financial Self-Help, Tax Tips|0 Comments

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