Do you find filing your Income Tax Return (ITR) difficult, confusing or intimidating? You are not alone. Tax jargon and information overload can be taxing especially for first timers.
It’s that time of year again when many taxpayers start feeling the anxiety build up as the filing deadline approaches, especially for those who do not have tax accountants or human resources assistance. For most taxpayers in the Philippines, April 15 is the annual ITR submission deadline.
“The looming annual ITR deadline can cause tax-time stress. I’ve seen signs of tax anxiety among people I encounter in my practice. The fear of making mistakes in calculations and filing, insufficient knowledge or tax literacy, and overwhelming paperwork can cause dread, even panic,” says Atty. Maria Louella (Peaches) Martinez Aranas, Co-founder and Managing Partner of LMA Law, a firm specializing in Taxation and Corporation laws.
Tax season anxiety is a common stress triggered by fears such as making mistakes, understanding jargons and complex rules, missing deadlines, facing large bills, or dealing with financial uncertainty – all of which often lead to distress. The process of preparing prior to filing taxes is taxing, but delaying will not change the deadlines and the hefty penalties in case you miss filing on time.
“In my 20+ years as a tax lawyer, this time of year is when we start feeling tax anxiety. It is the stress, worry, and fear associated with the process of preparing, filing, or paying taxes. It commonly affects both individuals and business owners,” continues Aranas, who has been addressing many misconceptions against taxes including the notion that taxes are complicated and burdensome.
Fear of taxes: Coping with the stress
Tax-related stress is a recognized issue by several and mental health practitioners in many countries, including the Philippines. It could result in emotional and/or physical symptoms, which can be avoided.
Whether you’re self-employed, running a business, or earn income from other enterprising endeavors, here are some common causes of tax-related stress according to experts:
• Fear of Errors – worrying about mistakes that could lead to penalties or audits • Complexity – feeling overwhelmed by jargon and confusing tax forms • Financial Pressure – stress from owing money or uncertainty about refunds • Procrastination – delaying the process, which increases stress
• Unpredictable Income – especially challenging for freelancers and business owners
Aranas advises: “Get organized. Most of the time, you only attend to ITR matters closer to filing deadline. This last-minute habit often results in chaos and distress. We already know that every year proper documentation related to your taxes is required to substantiate deductions, claim benefits etc.
“So to avoid last-minute stress, prepare early, and break up the process into smaller nuggets of tasks to make it less daunting. In case you experience seasonal tax ‘math anxiety’ consult a tax professional when preparing your ITR. Also, don’t hesitate to use BIR tools including e-services like tax computation, e-filing, etc.”
A tax specialist can explain or clarify complex tax regulations and guide you through the nitty gritty including:
• Individual income tax treatment –Tax Reform for Acceleration and Inclusion (TRAIN) brackets, withholding, substituted filing, and allowable deductions for self employed/professionals, if applicable
• Limited deduction rules for health/hospitalization insurance (where applicable) and proper tax treatment of insurance benefits
• Tax incentives and exemptions vary for individuals and businesses. Your tax expert will be able to help you maximize your incentives and exemptions
• Reporting taxable transactions is an area that you can unknowingly commit errors such as VAT miscalculations and incorrect gross receipts
• Updating taxpayer registration/withholding information such as civil status, employer, and business registration to avoid withholding and filing issues
“Don’t overthink it. Talking to a professional can help ease your tax season anxiety,” assures Aranas, who has over 20 years of experience in taxation laws including, but not limited to, closing multi-issued tax audit investigations of multinational corporations, assisting foreign investors doing business in the Philippines, securing tax refunds, advising and implementing creative tax solutions in corporate reorganizations and helping families in wealth and estate planning.
Contact: inquiry@lmalaw.org / Phone: +63 9177288628
Useful resources: www.lmalaw.org, Tax Guide For Professionals / Self-employed, BIR e-Services online hub, and Instant Calculator (to compute for your income tax and/or to check if you are paying the right obligations).
