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Whether you owe Uncle Sam money or you’re receiving a tax refund, filing your taxes can be stressful. Not only do you need to have all your paperwork on hand, but you also need to choose how you plan to file. Once you do, you need to carefully avoid mistakes, which can be costly.
If you’re anxious about filing and preparing your taxes, you’re not alone. A recent survey from CNET found that some suffer from tax anxiety, with Gen Z (51%) and millennial adults (48%) being most concerned. Their top fears? Making an error, giving scammers access to their personal information and not being able to afford what they owe the IRS.
Tax Day, April 15, may still be months away, but Current, a consumer fintech banking platform, shares five steps you can take now to help ensure that preparing and filing your taxes goes smoothly.
1. Set money aside for taxes you owe
If you expect to owe taxes to the IRS, set money aside now so that you’re not hit with a bill you can’t afford come Tax Day — and put a plan in place to save regularly throughout the year moving forward.
If you’re self-employed or expect to owe taxes, move your estimated tax savings into a separate account as income comes in, suggests Anna Sergunina, a financial advisor and president and CEO of Smart Financial Decisions.
“This creates a clear mental and financial boundary, reduces the temptation to spend money that isn’t truly yours and makes tax payments feel far less stressful when they’re due,” Sergunina says. “I keep an extra savings account and simply label it ‘Taxes,’ so the money is clearly spoken for long before Tax Day arrives.”
Keeping this money in a high-yield savings account means that it will be accessible when you need it, but will also earn interest while you wait to use it.
2. Familiarize yourself with the paperwork
Part of what makes taxes so intimidating — and why 25% of tax filers fear they’ll make a mistake on their tax return, according to CNET’s survey — is the many aspects of the paperwork you have to understand.
If you are not familiar with your tax return, set up a meeting with a certified public accountant (CPA) and have them walk through your return with you, recommends Anjali Jariwala, a CPA, financial advisor and founder of FIT Advisors. They can help you identify key numbers such as wages, business income and itemized deductions.
Speaking with a CPA now and giving yourself time to ask all your questions can alleviate some of the stress of sitting down to file your taxes last minute. This is also a good idea to familiarize yourself with common tax scams from the IRS, so you can keep your personal information safe.
3. Organize your documents
Take the information from the return review with the CPA to create your own checklist of documents you need to gather. Then, Jariwala recommends setting up a folder on your compute