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Tax Therapy - Reducing Tax Anxiety

Your taxes are at best an unpleasant annual ritual. Many find themselves stymied by some part of the process that prevents them from finishing or even starting their taxes. Failing to file or pay taxes on time leads to even greater distress. Tax Therapy helps you address the problem and find a way through that will reduce your anxiety and break the annual cycle of distress that taxes can cause.

1. Self-Assess Your Attitude About Taxes

In many years of practicing as a tax lawyer, I never encountered two people with the same attitude toward taxes. As a practicing therapist now, I know that each person’s subjective experience is uniquely their own. Tax Therapy is a model I developed based on Cognitive Behavior Therapy (CBT). The first step is to consider your attitude about taxes.

Do you hate paying taxes? Many people despise the government for taking a cut of their earnings. Even if we see a benefit from having a tax system, no one volunteers to pay taxes; they are extracted from us by force of law and threat of criminal sanctions.

Do you postpone and delay doing your taxes? Not only do we have to pay taxes, we also have to prepare and file a tax return, or pay someone else to do it. Getting organized to file a tax return is not pleasant. There are loads of better things to do: watching the Superbowl or animal videos is a lot more fun.

Do numbers and rules overwhelm you? Tax returns are so confusing that even tax accountants who prepare returns often shrug their shoulders and say, “that’s the way the computer does it.” AI came to tax return preparation a long time ago because a computer can do the heavy lifting in preparing a return.

Are you afraid the IRS will come after you? If you fudge a bit on your taxes or even if you don’t, you may worry or obsess about what will happen if the IRS audits you.

Are you traumatized by taxes? Taxes may bring up memories of parents fighting about them, or an IRS audit or levy, or some other disturbing event. Doing taxes can be retraumatizing.

Do you need, and can you afford, to have a professional do your taxes? Many people cope with the stress of taxes by handing them over to a tax professional. They may give their accountant a boxful of receipts and wash their hands of it. If this option works for you, follow it.

2. Look at the Messages You are Giving Yourself

The ways we feel and behave largely depend on the messages we give ourselves. Lying underneath these statements may be automatic thoughts (aka cognitions) which arise spontaneously without any reasoning.

Here is a sample of the way people talk to themselves or others about taxes (expletives omitted):

  • “It’s not fair.” Underneath this statement may be any number of thoughts which can engender resentment and bitterness:

    • “Why can’t rich people pay more.”

    • “I know loads of people who cheat on their taxes.”

    • “I can’t afford to pay my living expenses and give money to the government, which it will waste anyway.”

  • “I will never understand how taxes work.” Underneath this generalizing statement may be the thought “I’m stupid” or “I’m terrible with numbers.” Negative self-talk tends to increase stress and lower our level of self-esteem.

  • “Why aren’t I getting a refund” or “Why do I have to pay more?” These questions can express anything from a gentle inquiry to an angry accusation, or a cry of distress. The questioner’s emotional experience depends on how they interpret the situation they are facing. They may be angry and upset if they believe they are being mistreated by the system.

Your experience depends on your set of thoughts. Aaron Beck, the founder of CBT, has noted that certain thoughts may develop from childhood and reside deep enough to be considered core beliefs or schemas. Core beliefs are enduring understandings that are taken as absolute truth. An example of a negative core belief is “I am incompetent.” Where does this belief come from? It could be a highly critical or shaming parent, caregiver, sibling, or teacher. You are not born with this belief.

3. Track How Taxes Are Affecting You

Your attitude toward taxes and the thoughts and beliefs you have about yourself will strongly influence how you deal with taxes and how they affect you emotionally. Taking a first step, which can be just looking at your form W-2 or 1099, moves you forward. This first step is part of exposure therapy; gradually opening yourself up to the distressing situation you fear. You can schedule when to add more steps. As you take each step, here are specific areas to look at and keep track of:

  1. What part of the tax process is affecting you? Possibilities include:

    1. The sheer realization that taxes once again need to be addressed.

    2. Getting organized and finding paperwork.

    3. Deciding on who will prepare your returns this year.

      1. Yourself using a program.

      2. A friend or relative.

      3. A professional return preparer.

    4. Doing the tax preparation.

    5. Talking with the return preparer.

    6. Completing and filing the return.

    7. Paying the tax bill if there is a balance due.

  2. Notice what is happening to you during the process. Are you experiencing any of the following physical symptoms, and what part of the process seems to be causing them:

    1. Nausea

    2. Heart rate increase

    3. Shakiness

    4. Dizziness

    5. Headache

    6. Shortness of breath

    7. Tightness in the body

  3. Notice the thoughts you have before, during and after any part of the process that causes anxiety or distress for you.

  4. Notice how your behavior is affected. This may include:

    1. Anxiety reducing actions, e.g., eat, drink.

    2. Avoidance actions, e.g., look at your phone, think about something else, go out, watch television.

You may notice that the cognitive, emotional, physical, and behavioral components are interacting with each other. This is a key feature of CBT: beliefs influence thoughts, which influence emotions, which influence physical effects and behavior, and each of these aspects can circle back and affect the other.

4. Moving Ahead with Your Taxes

When you can see where and how the tax process is affecting you, you are well on your way toward addressing the problem. By looking at your attitude, internal messaging, and emotional/physical responses, you can see the factors causing your psychological distress. The next step is to target the distorted and irrational beliefs and thoughts that contribute to your distress.

Common distortions in cognitions include overgeneralization, black-and-white thinking, and catastrophizing (or its opposite: minimizing). Distorted core beliefs or schemas include the following: people (e.g., the IRS) are out to get me, I could get hurt, I must get it perfect, I am helpless or worthless.

These distortions can show up in various places in the tax process and wreak havoc on your resolve to finish your taxes. If you find yourself derailed in the tax process, try creating a record by writing down what is happening: the situation or issue, your thoughts, the sensations and emotions you experience, and your behavior. This record will help you to see where and how the process is affecting you. You might take your next pass at doing the taxes from a different starting place and discover that you can finish them by coming at them from a different perspective.

5. Conclusion

You can learn to stop worrying and do your taxes. Start by following the steps in the Tax Therapy model. Following this model can help you relieve distress, finish your taxes, and increase your happiness.

Tom Henning, JD, LLM (Taxation), MA (Clinical Psychology), practiced tax law as a partner of two Los Angeles law firms, and currently practices therapy in West Los Angeles.

©Thomas Henning 2023

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1 Comment

Ursula Baird
Ursula Baird
Apr 20, 2023

I don't know anyone who likes taxes, but having the thought process (and all the cognitive distortions that go with it) laid out--is just so helpful! The anxiety, or the avoidance, is so palpable this time of year. Thank you for naming it and offering some solutions!

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