Introduction
April 15th marks the annual deadline for filing your taxes. For many, it's a time of stress and financial burden. But beyond the monetary costs, tax season also takes a toll on our mental health and has a significant impact on small businesses. In this blog post, we'll explore the hidden costs of Tax Day, drawing inspiration from our latest podcast episode, The Taxing Truth About April 15th and World War Whispers.
The Financial Costs of Tax Season
Filing taxes can be expensive, especially if you need to hire a tax preparer. According to the IRS, the average cost of tax preparation in 2021 was $253 for simple returns and $490 for complex returns. For small businesses, the costs can be even higher. In addition, tax season can also lead to lost productivity as individuals and businesses spend time gathering documents and completing tax forms.
The Psychological Burden of Taxes
Tax season can be a stressful time, leading to anxiety, depression, and sleep problems. According to a study by the American Psychological Association, 44% of Americans report feeling stressed about taxes. This stress can be particularly severe for individuals who owe taxes or are facing tax audits.
Tax Season's Impact on Small Businesses
Small businesses are disproportionately affected by the costs of tax season. In addition to the financial burden of tax preparation, small businesses often have to deal with complex tax laws and regulations that can be difficult to navigate. This can lead to increased stress and anxiety for business owners and can also take time away from running their businesses.
Tax Season and Individuals
For individuals, tax season can be a time of financial hardship, especially for low-income households. The Earned Income Tax Credit (EITC), which is a refundable tax credit for low-income working individuals and families, is often delayed during tax season. This delay can put a strain on low-income households and can force them to make difficult financial decisions.
Navigating Tax Season
There are a number of steps you can take to make tax season less stressful and less costly.
- File early: The earlier you file, the more time you'll have to resolve any issues that may arise.
- Gather your documents: Make sure you have all of the necessary documents before you start filing your taxes.
- Consider hiring a tax preparer: If you have a complex tax situation, it may be worth considering hiring a tax preparer.
- Take advantage of tax breaks: Make sure you take advantage of all the tax breaks that you're eligible for.
- File electronically: Filing electronically is more secure and efficient than filing by mail.
Conclusion
Tax season is a stressful time for many, both financially and psychologically. By understanding the hidden costs of Tax Day and taking steps to minimize their impact, we can make this time of year a little bit easier on ourselves and our businesses.