Just in time for Halloween, I compiled a list of some of the scariest things about taxes. Even though many people feel taxes are scarier than speaking in public, for the majority of people, tax-time is the single largest cash windfall of the year. More than 75 percent of all taxpayers get an average tax refund of $3,000 -- nothing scary about that. Here is my stab at the top 10 reasons people are afraid of income tax:
MAKING MISTAKES -- getting into trouble with the IRS because you used the wrong form, something was miscalculated, or transposed. The fear of making a mistake and having people judge you for the mistake is really scary. It's only slightly less scary than a dude with a leather mask and a chainsaw stopping to help you with your stalled car.
MISSING A DEDUCTION -- you aren't sure if it is valid or not, when you aren't certain of the right thing to do you might make a mistake - see fear #1 above; like splitting up from the group when an axe-murderer is chasing you, stop and think. Get help if you aren't sure.
GATHERING THE PAPERWORK- all that overwhelming paperwork -- you know, the checkbook, the bank statements, and tackling that shoe box from hell. The one in your office closet that grows and grows and grows all year long ... like the movie "The BLOB."
ENDLESS PAGES OF RULES & REGULATIONS, FORMS AND INSTRUCTIONS -- even if you understand the federal tax rules, you must also learn State rules because they are not always the same. You think you've got it under control, but there is always another rule or regulation to take into account. Like Zombies...They just keep coming.
UNDERSTANDING ACA -- more zombie-like tax implications, this is the one that won't die! Healthcare and insurance were part of many returns in the past, but not like this. Heed the warnings, this is complicated stuff. If you sense danger, do not go into the basement alone.
BEING IN A HIGHER TAX BRACKET -- you finally find the courage to take that hellish box out and start your return only to find out that you somehow advanced to what feels like the Addams Family tax bracket and will pay 30%, 40%, or even 50% of your total income in taxes - dreadful indeed.
OWING A BIG CHECK - Having a balance due to the IRS is like the anti- lottery- instead of winning... you owe. And you find out you owe when money is the tightest - after the holidays.
STRESSING OUT -- Money, deadlines, complicated rules, forms, instructions and attachments, all the time it will take. It's like that nightmare where you walk into high school class and you didn't know there was a test AND no excuse or note from a parent will delay the inevitable.
KNOWING WHO TO TRUST -- is your accountant or tax preparer the good Dr. Jekyll or the evil Mr. Hyde? Telling someone you barely know all of your financial secrets and personal information is intimidating especially when you see them only once a year. Finding a Tax Pro that you can trust will help fix that. If you aren't sure, get some recommendations or seek out a second opinion.
HAVING YOUR ID STOLEN -- Identity theft is horrible enough, but tax refund theft takes identity theft one step further. One of the best ways to prevent your tax refund from being hijacked is to file your tax return early and electronically. The IRS has a number of methods in place to help prevent someone else from getting your refund.
Getting your taxes prepared and filed may seem like a really scary thing, and to many people it is a scary event, but it does not need to be.
There are many things you can do to alleviate your tax return fears, starting with planning and preparation. If you don't know how to handle a situation on your tax return be sure to seek professional help, because in reality the scariest thing would be to NOT file your taxes because the penalties for not filing are far worse than if you file but don't pay on time.