HELPFUL INFORMATION FOR YOUR BUSINESS DURING COVID-19

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Why we procrastinate on filing taxes & how to tackle tax prep sooner!

This topic is close to my heart. Not because I’m an accountant who wants my clients to stop procrastinating (I am not an accountant). Truthfully, I’ve wrestled with procrastination for most of my life. There are certain things that I’m proactive about, but other things fall squarely in the procrastination realm. In fact, some of my most productive house cleaning days have been when I was procrastinating on something I disliked even more than cleaning… like taxes!

In the past I procrastinated on tax prep because:

  • I couldn’t remember all the documents I needed to gather. So I had to comb through a pile of paperwork and consult Google to figure out if I was missing anything.
  • Part of me was afraid I would forget something and mess it up. A mistake could lead to getting audited!
  • What if I owed money? What if I accidentally underpaid the previous year?
  • Gathering tax documents and reviewing financials is boring. (This is why I’m not an accountant!)
  • I have until April 15… it can wait.

Common reasons we procrastinate 

Did you ever stay up all night to finish a project in school, even though the teacher gave you weeks to complete it? Or have you been hit with a late fee after paying a bill past it’s due date, despite having the money to pay it? There are tons of reasons why people procrastinate! It’s not a lack of “willpower”, but something negative associated with the task you want to avoid, like:

  • Fear of failure 
  • Fear of not doing it perfectly
  • Uncertain of how much time it will take, or fear it will take a very long time
  • Expecting the task to be tedious or difficult
  • Feel like you don’t have control over the process or outcome
  • Feeling too overwhelmed or exhausted to start a “big project” 

Now that we’ve looked into procrastination, I’ll share some methods and tips to get the hard stuff done, sooner.

The motivation myth

In the book The Motivation Myth: How High Achievers Really Set Themselves Up to Win, Jeff Haden explains that you shouldn’t wait for motivation to strike before you get started. Motivation will not magically hit you like a lightning bolt in the middle of a Netflix binge session.

The truth is, getting started and making some – any – amount of progress, is when motivation will “strike”. Progress is what motivates

When I bought paint for my bedroom, I expected to feel motivated to paint my bedroom. But I wasn’t. When I finally ‘got around to’ prepping the walls – clearing cobwebs, filling in holes – that motivated me. Spending money was easy. But getting my body into motion and accomplishing tiny tasks made me feel surprisingly good. My brain rewarded me with dopamine and I was finally motivated to do what I had wanted to do for months. 

Eat that frog

Another inspiring book on the topic is Eat That Frog!: 21 Great Ways to Stop Procrastinating and Get More Done in Less Time by Brian Tracy. Imagine that you are required to eat a frog one day (bleh!). You could ‘save it’ for the end of the day because you’re dreading it. Then it would be on your mind all day, weighing you down, distracting you from other tasks, and probably stressing you out. 

The other option is to eat that little amphibian first thing in the morning. Knowing you did the hardest thing of the day already, you feel accomplished, motivated to keep working, or able to fully relax if that is your goal for the day. 

The fact is, I’ll never finish my entire to-do list in one day. And I’ve accepted that. But by tackling the most important thing on any given day first (without overthinking it too much), I can get more done, with less stress.

Make it easier this time

Sometimes a few small actions will get your butt into gear – like putting on workout clothes and running shoes when you first wake up to make sure you exercise. For tax prep, try these:

Schedule time

Reserve some time on your calendar right away to get started, with an alert (or two) to remind you.

Schedule an appointment

Schedule an appointment with your tax preparer in February or early March (if you normally meet to walk through everything) to give you a deadline. Some people are very deadline-driven. 

Plan a reward

Plan something to treat yourself. Our brains are wired to seek reward and avoid loss. Choose a small reward for yourself for any day that you make progress on your tax prep, and a bigger reward once it’s complete. 

Break it down

Divide the job into manageable chunks. Many (okay, most) projects take longer than I expect, which could make me hesitant to start. But when I decide to just do a small part of a project on a certain day, I don’t dread starting. It’s easy to tackle a 5 or 10 minute activity. For tax prep, you can just read about what’s new for 2021, just review/print a tax document checklist, or just gather your income documents (W-2, 1099, etc.) into one place, to start.

Educate yourself

Learn about the credits and deductions that may apply to you or your business. Whether your accountant is asking the questions or an online software is providing the prompts, the process will be much quicker and easier if you already have the supporting documentation ready

Make it easier next time

Save relevant documents

Save documents throughout the year neatly in one place. No shoebox full of receipts! If you handle your bookkeeping and deduct expenses for travel, meals, mileage, etc., take a few minutes weekly or monthly to make sure everything is logged in your accounting software correctly. If you don’t have accounting software (like Xero), at least log your expenses in an excel spreadsheet and keep the receipts in the unlikely event that you are audited. 

Learn about what’s new for the tax year

While the IRS is the official source of the tax code, it can be hard to find specific information on their website (or understand it when you do find it). Following the blog of a reputable accounting firm or tax prep company will give you the highlights in plain English. And knowing about changes during the tax year can help you lower your tax liability. 

If you are due a tax refund

When I file my taxes, I am usually owed a refund (I know Dad, it is a free loan to the government). And I used to think to myself, “well Rachel, does it really matter when you file? The outcome will be the same. You’ll get your money back eventually.”

Now let’s look at this from a different perspective. If your boss walked up to you and tried to hand you your paycheck, would you say “eh, I don’t need that right now. You keep it and give it to me in 2 months.” No! Of course you wouldn’t. So if you overpaid in taxes last year, file right away and get your money back sooner. 

And while we’re on the topic of over-paying taxes, consider adjusting your withholding so you get more of your money in every paycheck. But only if you get refunds every year. Talk to your accountant or tax preparer about this one if you need guidance. 

If you owe the IRS money when you file

By completing your tax prep early, you have some time between when you learn that you owe money to the IRS and when you need to submit a payment. Tax payments are due April 15 – even if you filed an extension! 

With a month or more of lead time, you may be able to lower expenses or make other changes to make the payment easier. If nothing else, there’s a cooling off period before you need to pay. Remember, you can talk to the IRS about a payment plan. But the closer it is to April 15, the longer the wait times will be to speak to someone who can help.

If you’re an employee

Consider adjusting your withholding. I know those federal and state exemption forms can be confusing. Generally, the lower the number of exemptions you claim, the higher your tax withholding from your paycheck. While nobody wants to see a lower number on their paycheck, it’s even worse to owe the IRS a big chunk of money at once. 

If you’re a business owner or self-employed

Consider increasing your quarterly estimated  tax payments. No one has a crystal ball to predict the future. But, if your profit grew last year more than you expected, plan on the same type of growth this year. 

You are not a procrastinator!

You have a habit of procrastinating, 

you can learn to break that habit.

– Cathy Wood

Have a great tip for overcoming procrastination? We’d love to hear from you in the comments.  

You might also be interested in:

How to Feng Shui your workspace
Book club: You are a badass
Home office deduction during the pandemic
From 1099 contractor to W2 employee
What’s new for filing 2021 taxes

About the Author

Rachel Law

Rachel Law

Rachel Law, Marketing Manager at Numberwise, has over 12 years of experience in marketing and communications. She coordinates content for all of our marketing channels, and loves a good meme. Rachel is a health and fitness enthusiast who enjoys yoga and running. She has 2 kids and a growing number of indoor plants which may or may not have names.
Rachel Law

Rachel Law

Rachel Law, Marketing Manager at Numberwise, has over 12 years of experience in marketing and communications. She coordinates content for all of our marketing channels, and loves a good meme. Rachel is a health and fitness enthusiast who enjoys yoga and running. She has 2 kids and a growing number of indoor plants which may or may not have names.
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