S2 E2: 😶🌫️ Tax anxiety and what to do about it
EPISODE SUMMARY
Rachel Duncan, Financial Therapist, responds to a listener question about the emotional side of taxes. Why do we still feel tax anxiety even when we've improved our systems and understanding? We dive into the psychology behind our tax-related stress and offer practical solutions to help soothe your tax anxiety.
How childhood experiences with taxes can create lasting anxiety
The anniversary effect - how your body remembers past stressful tax seasons
Understanding anxiety as your body's call to action
The four trauma responses (fight, flight, freeze, fawn) in relation to taxes
Somatic awareness exercises to identify and soothe tax-related fears
💬 "Your logical brain knows that you've done everything right, but your body is remembering past experiences of tax anxiety. It would make sense that your nervous system today is trying to protect you from that perceived threat happening again."
Key takeaways from the episode:
Tax anxiety is incredibly common, especially for self-employed people
Our bodies may be responding to past negative tax experiences even when our minds know we're prepared
Anxiety is your body's signal to take action - physical movement can help process it
The four trauma responses can manifest in our tax behaviors: fighting the system, avoiding/procrastinating, freezing up, or overcompensating
Rightsizing the threat helps put tax concerns in perspective
Creating positive sensory associations can help rewire your tax experience
Problems and mistakes with taxes are fixable
⏰ EPISODE BREAKDOWN
00:02:00] Amelia's question: why do I still have tax anxiety despite having systems in place?
[00:08:00] How to understand anxiety as your body signaling you to take action
[00:09:00] The four trauma responses and how they manifest around tax time
[00:14:00] Somatic awareness exercise to identify and soothe tax anxiety
📚 Resources Mentioned
Off the Grid Podcast (Amelia Hruby, thanks for the question!)
Tax calculator (but if you're self employed, add an additional 7.65%)
💬 Join the Conversation
Click on the big orange button on our site right from your phone or browser and let me know what's one step you'll take to work through tax anxiety?https://www.moneyhealingclub.com/podcast
🎧 Your next listen: How I became a Financial Art Therapist
💫 Use code PODCAST for 50% off your first month and start your money healing process! [H3]
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[00:00:00]
Rachel: Welcome to the Money Healing Club podcast. I'm your host, Rachel Duncan. I'm a financial therapist and art therapist, and you've come to the softest place to land in personal finance. This podcast is for education and entertainment purposes only. For help with your particular situation, please seek help from a licensed professional in mental health, taxes, and finance.
Here, we talk about all the things we don't usually say when we talk about money. Let's begin.
Speaker 2: Hi Rachel. I have a question for you about taxes. And really about the emotional side of paying taxes, less the logistics side. So I have always been very stressed about tax season ever since I started earning money. I used to panic when tax time [00:01:00] came. I had some big tax bills that were rather unexpected, and it was really stressful throughout my twenties.
I feel like in my thirties I cleaned up my act. I started organizing my papers better and earlier I hired an accountant and I feel like I'm really on top of the like logistics and systems around tax season now, and I have the support I need to file my taxes, but I still get so anxious and stressed this time of year and it impacts like everything I'm doing with my finances.
Through kind of February, March, April. So I'm curious what your advice is for somebody who got the financial aspects of taxes all cleared up, but is still experiencing like high levels of stress and panic and overwhelm around this now seemingly simple act of like signing the tax form my accountant sends me and then sending a check if I have to that year.
So [00:02:00] can you help me please? Thank you.
Rachel: What a great and honest question left by the one and only Amelia Hruby. Amelia is the host of the Off The Grid podcast, and many of my listeners here found me through being on Off the Grid about a year ago. If you wanna know how to do business without social media and without losing your clients, you have to check out off the grid and I'll link to it in the show notes.
so Amelia. That's great that you've improved your systems and understanding about taxes. Huge. But I think you can see that the progress is more in your head and your body hasn't caught up with it yet.
So in this episode I'm gonna talk about why I think we experience such big emotions around taxes. I'm gonna give you some tips about how you can start to heal this experience too. Look, I am not a licensed tax professional, so I'm not gonna give specific tax guidance here, but I'm a financial therapist, so I'm going to bridge the [00:03:00] practical with the emotional.
I wanna start by acknowledging that tax anxiety is incredibly common, especially for US self-employed folks. Or if you have any kind of income situation that is different than full-time W2 payroll type employment.
And let's even look at the word tax and all of the non-financial ways we use that word. Ugh. I had such a taxing conversation with that person,
or I really paid my dues. Right? There's this feeling of being extracted. There's a feeling of it being a one-way street, even just with that word. So we have a lot of negative associations with that word anyway. But hey, especially for us, in the US, we have a very complicated tax system. And then the word tax has taken on so many layers that has like really no upswing.
Now I wanna talk about the personal side of it. I want you to think about when you were a kid, how did you observe the adults around you respond to tax time? Did you [00:04:00] maybe absorb some sympathetic stress that was going on in the household? Say your family went through an audit. Maybe you witnessed your caregivers go through a ton of stress that removed them from family dinners for a week, or, uh, there were arguments at the table that you overheard as a kid around back payment or having a surprise large tax bill.
If you are hearing this as a kid and you're seeing your primary caregivers have a lot of stress, conflict, fear around a topic, you know, as a kid, you're absorbing all the cues about danger in the world.
And that can implant some pretty deep seated fears going forward, that even as you've grown into an adult, you understand it more logically. There could be something that you've absorbed from your own personal upbringing that are telling you this thing ain't safe.
I also wanna talk about anniversaries of important events. I think we [00:05:00] often overlook the importance of anniversaries of landmarks, especially in grief therapy. We are looking ahead to anniversaries of major life events and loss as having a very physical nature. When you come up on November again, for example, when maybe you suffered a loss in a November, subsequent Novembers may have a certain emotional character to them because your body is remembering what was going on at that same time of year when something hard happened.
So let's say 10 years ago you went through an audit and it was in May, and it was hard. You had to dig up files you didn't think you had, you had a ton of stress, you weren't doing your normal stuff. You were so worried you were gonna get in trouble. And what happens is your brain is constantly picking up all the potential threats around you. And if you're going through something that's feeling very threatening, very [00:06:00] emotional, where you maybe feel hopeless, your brain isn't just remembering the thing you're doing or reading, it's remembering the smell in the room.
It's remembering the cherry blossoms. It's, it's remembering the seasonal change in how that felt. Probably countless other nonverbal things your brain is absorbing and. Your brain just wants you to be safe. So then, hey, you smell the cherry blossoms again, and your brain says, uhoh audit time freak out right now.
So, so acknowledge the fact that taxes are an annualized almost ceremony. And if there's been times in the past where it's been really hard for you or stressful, or as a kid you saw this feel like a very threatening, conflict filled thing, then even the, the, the smell of the first spring rain may bring up a lot of other associations with this being maybe a "dangerous" [00:07:00] time of year even. I put danger in quotes. Not actually dangerous, but a perceived danger.
I also wanna talk about the word anxiety since you brought it up in your voicemail. Anxiety is really interesting because it's really your body's way of signaling you to take action and the anxiety can feel really difficult if it has nowhere to go, or if you fight against it and don't take action.
If you have this sort of internal struggle. It's sort of like a pressure cooker, I wanna normalize the experience of anxiety, that it is your, your body and brain's way of gearing up to take some action.
So if you're feeling some anxiety, one of the best things to do is to incorporate more physical, even aggressive movement into your day to day. 'cause that's actually what anxiety is wanting you to do. It's wanting you to take action to get safe. So even if it's, Hey, maybe you're gonna go to the gym a little bit more, or take some more walks [00:08:00] or punch a pillow, that's gonna do a lot more for you to work out the anxiety than to try to tell yourself to calm down.
You gotta work through it for it to finish its cycle.
So while you're working on taxes, this may be a really good time to increase your physical movement, especially something that's maybe a little bit enervetic kinda get some aggression out. So maybe less Hatha yoga, maybe more Ashtanga.
So your logical brain knows that you've done everything right and that is so great, but your body is remembering past experiences of tax anxiety.
It would make sense that your nervous system today is trying to protect you from that perceived threat happening again. Even just looking at the month of February on your calendar.
All right, so now we're gonna talk about trauma. 'cause that's really what I've been talking about this whole time. Trauma is the brain recalling a threatening [00:09:00] event and all the associations that happened with that threatening event and telling you that that threatening event might be happening now and you need to do something to stay safe.
So you may have heard there are generally four different types of trauma responses, fight, flight, freeze, or fawn. Here's some examples of how these traumatic reactions can happen around tax times.
So fight: you may find yourself getting irritable or defensive about taxes. You might feel this righteous anger about having to pay taxes when the government is blah, blah, blah. The resentment around the system, how hard you've worked, right? It's about kind of injustice, that righteous anger. Well, that makes a ton of sense.
It's very protective.
Then you've got flight, which is the strong urge to procrastinate or avoid anything tax related. And I'll just file an extension. Ah, future me problem. The avoidance is sort of a flight response,
[00:10:00] and then there's freeze. That feeling of being unable to move forward even with the simplest tasks like signing a form or replying to an email about taxes.
And the freeze response can do a double whammy if you're also feeling anxiety. So you have this struggle between wanting to move forward, this urge to move forward, that anxiety gives you, and the frozen state that's telling you to stay still in order to stay safe.
And then there's fawning, which could look like overcompensating with extreme organization or overpaying your estimated taxes because you're afraid of conflict or getting in trouble. Another example is recording a podcast episode about the emotions around taxes. Instead of actually finishing them and sending the info to your accountant.
I wouldn't know anything about that.
So any of us can have a lot of conditioned fear responses toward taxes for all sorts of past negative experiences with it. Your body doesn't know that you've fixed your [00:11:00] system. It only remembers that past distress, stress, and fear, and the experience of feeling threatened.
Before I go on to what we do with tax anxiety, I wanna take a sidebar for a minute and talk about back taxes or owing money to the IRS. First off, if you owe back taxes, it's okay. You can set up a payment plan. You are not going to get in trouble. Do you need to take it seriously? Sure. But I think often we have this underlying feeling of like, oh, I'm gonna get in trouble.
It's shameful to have back taxes to owe to the IRS. But look, if you were not paying your estimated taxes, like if you are self-employed, that means you've kept more money for yourself, for your life and your business than the rules said you should.
If you're in a place where paying your estimated taxes throughout the year isn't possible for you, you may need to think about your business setup. I'm talking about [00:12:00] raising your prices, reducing your costs, and really think about including your taxes when you are setting your price. We often forget about this. The number you should have top of mind is for each dollar you make, how many cents do you need to put aside for your estimated taxes?
Back to how we get out of tax anxiety, I would say, first off, we need to rightsize the threat. Okay. Maybe you need to set up a payment plan with the IRS if you didn't pay enough in estimated taxes, okay?
Is that really a threat to your wellbeing? It might be a little tricky to scrounge up that money. I get it. The, that financial stress is real, but it's not life threatening. This is a figure outable situation.
There are people in the world that can help you figure this out. You do not have to become an expert in taxes. I do recommend you get familiar with it, but you don't have to be the expert. That's why we have CPAs in the world, [00:13:00] so get someone you trust on your team share the burden.
I've included the link in my show notes, or you can just Google IRS volunteer income tax assistance to find a volunteer in your area who can help you get your taxes done.
If you stay in touch with the IRS and your accountant, you have a plan for back taxes, amend what you need to, you're gonna be in okay shape. Mistakes can be fixed in this system.
Okay, now I wanna talk about more somatic awareness of tax anxiety. So as I say, the word taxes. Just notice what comes up in your body, where does it live in your body?
Are there any colors, shapes, symbols, or forms associated with it? And as you bring it into some awareness, just take some breaths into that space[00:14:00]
and you can say, oh, there you are. Old friend. Doing your best to protect me. It's okay. I'm not going to get in trouble. I have good people to help me. If I make a mistake on my taxes, it can be fixed. It will be fixed. I am a good person. I will not get in trouble. I am safe.
Another thing you can do is. Picture someone you're close to in your life, someone you really admire, who does good work, and I want you to imagine that their job is at the IRS. The IRS is a government agency filled with people just trying to do their jobs. Your friend is going to work. They are doing it fairly and smartly.
They are overworked, they have limited [00:15:00] resources. And they're following the rules. They are not out to get you. You can help them do their job by getting them the information they need. They know that you are not an expert in taxes.
It's okay.
Quick, PSA, everyone, the IRS only communicates in snail mail. If you get a phone call saying it's the IRS, it is not the IRS. Let me repeat. The IRS will never call you. Okay, got it.
Okay, so as we identify and soothe the parts of us that are afraid, we're gonna get in trouble with the IRS, we can start to create new positive associations with tax time. That's what's so great about our brains. They are so flexible, so malleable that we can bring in other sensory experiences to cue safety instead of queuing threat.
[00:16:00] One thing is to schedule a small reward or celebration after you achieve some milestone with your taxes.
I recommend you chunking it out so you're celebrating with many guideposts along the way, not just when it's all done.
While you're working on your tax information. Create a calm, pleasant environment. You know the lighting a candle, having a yummy snack, playing music you enjoy, being in a comfier spot in your home. Start introducing some new positive sensory things that will teach your body. Eh, this is just another thing I'm doing.
No biggie. I also recommend that you keep up with your bookkeeping and any of your tax document organization throughout the year, so it's less of a headache in January to get it all together.
Okay, find an accountability buddy or a membership group to do some co-working.
Get some cheerleading. Give some cheerleading, because hey, we're all just trying to get our taxes done.
And lastly, if you don't have a tax professional and you [00:17:00] think you need some help, or if you have a CPA that you don't enjoy working with, you have every right to look for one you enjoy working with.
And please always get at least three quotes. It's really worth it to shop around.
Try out these new phrases to repeat to yourself. Paying taxes means I made money. If I owe money to the IRS, it is because I made money. It is evidence of my success. This is my contribution. Even if I don't agree with how the money is spent, it is my responsibility to pay my taxes.
Look, my hope is that someday you'll approach tax time with the same sort of neutrality as getting gas or brushing your teeth. I'm not saying taxes will become your favorite thing, but it is just something we all gotta do. You will not get in trouble. All problems, all mistakes are [00:18:00] fixable. It is a safe thing to do.
I wanna thank you for this really timely and wonderful question, and as we say in the Money Healing Club, financial healing happens in community, and I'm glad we can talk about this stuff.
So I'd love to collect more of your thoughts and feelings about taxes for a future episode of the podcast. Go over to moneyhealingclub.com/podcast and you'll see a big orange button to record your own voicemail. Just like this one I responded to.
What's one small step you can take to begin changing your emotional relationship with taxes today?
Thanks for listening to the Money Healing Club podcast. If you enjoyed this episode, you'd probably really love my free email course on curbing impulse spending with compassion and mindfulness.
Check it out at moneyhealingclub.com/challenge.