I used to be terrified of the IRS, until a surprise bill for $1,200 cured me of my fear

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I used to be terrified of the IRS, until a surprise bill for $1,200 cured me of my fear
letter from irs taxes

Vinicius Bacarin/Shutterstock.com

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The thing I had been dreading happened to me.

  • I used to get majorly stressed over taxes, joining about half of Americans who experience tax anxiety.
  • Then, I got a letter from the IRS saying that I owed money because of an error on my return. It was exactly what I had been afraid of.
  • I corrected the mistake, and set up a payment plan for the $1,200 in additional tax that I owed. Since then, I've been much more relaxed about my taxes, knowing that it's easy to correct an error that might occur.
  • Read more personal finance coverage.

I was sitting cross-legged on the floor of the studio apartment that my husband and I shared, a seasonal rental on a beach that was now covered in snow.

"Why are you so stressed?" my husband asked.

I shot him a glare from over my laptop and stacks of paperwork. I was stressed because I was doing taxes. Everyone knows that taxes equal stress, right?

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Apparently, not my husband.

"You don't need to worry so much," he said.

And yet, worry I did. I was terrified of making a mistake on taxes (but not terrified enough to pay a professional, however). As a kid I heard rumblings about tax refunds being snatched back unexpectedly, and another family member being audited. Add that to the already fraught relationship that most Americans have with the IRS, and I was downright scared.

As a freelancer, I had terrible tax anxiety

I'm not alone in feeling anxious about filing taxes. One study found that almost half of Americans feel anxious when they get correspondence from the IRS, and about one-third are afraid of being audited.

If you're intentionally being deceptive on your taxes, you can be in big legal trouble. Even if you make an innocent mistake you can end up with an unexpected bill, a big deal for the majority of Americans living paycheck to paycheck. It's no wonder we worry, come tax time.

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As a freelancer, I had lots of decisions to make when it came to taxes. I needed to decide what was a business expense, and what was personal. Did my writing nook count as a home office? What exactly were my research expenses?

All of these questions left me unsure whether I was doing it right, even as I researched online about tax deductions. That just contributed to the worry that I felt year after year during tax time.

The letter I had been dreading finally arrived

Then, one year in the late spring I received a thick letter from the IRS. My stomach dropped as I walked up my long driveway. The IRS never sends thick letters with good news.

Inside, I read the documents. The letter was exactly what I had been dreading: a document informing me that I owed $1,200 in additional tax, because of a mistake on my returns. The irony is that the mistake wasn't mine, it was from a client who had made an error on my tax documents.

Still, here I was on the hook, feeling slightly panicked about coming up with money that I didn't have to pay the IRS.

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I decided it was time to meet with a professional. I was flighty and panicked when I walked into the tax preparer, but the woman who looked over my return was calm and kind. I had done everything right, she said. The difference in tax owed was just an error from the paperwork. All I needed to do was accept the adjustment from the IRS, and either mail a check or set up a payment plan.

The fallout wasn't nearly as bad as I expected

It really was that easy. I signed a paper, essentially recognizing that the IRS was right. I mailed a check for about $100 and requested a payment plan. A few weeks later I had another thick letter from the IRS, but this time it was good news: I had a payment plan that I could easily manage.

Since I got that letter four years ago I've been much more relaxed about taxes. The thing that I had been dreading happened to me, and it was just fine. Now, I do my best with taxes (and always double check client documents), but I know that if there's an error I'll be able to correct it without too much strife.

Many of my colleagues still experience the tax anxiety that I used to have. Because of this they're overly cautious and potentially leaving money on the table. Business owners like myself have access to lots of potential deductions, like a home office, and we need to be confident enough to take the deductions that we're entitled to.

Now, I approach my taxes in a much more balanced way. I follow the rules, but I don't stress about taking every deduction that I can. And, I know that if I happen to make a mistake, fixing it is not going to be a big deal.

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