Tax season poses health risks to those with something to be worried about

Steve Mertl
National Affairs Contributor
Daily Brew
Tax season poses health risks to those with something to be worried about

If you haven’t already filed your income tax return, don’t worry. You’ve got another two weeks. But it’s probably starting to nag at you a little bit, right?

You’re not alone. According to data compiled by H&R Block Canada, about a quarter of us waited until the final week before the April 30 deadline to file last year, up 10 per cent from a decade ago. The figure could be one in three this year, the firm’s analysts suggested.

As of April 6, only 11 million tax returns had been filed with Canada Revenue Agency, according to CRA data. Last year, a total of 28 million returns were filed for the 2013 tax year.

Apparently we don’t get too wound up about it, perhaps because if we don’t owe anything there’s no financial penalty for filing a late return to the Canada Revenue Agency – what’s known as a soft deadline.

“So for a lot of people, if you don’t owe any money, then that takes that stress off,” Caroline Battista, a senior tax analyst with H&R Block Canada, told Yahoo Canada News.

Our American friends, on the other hand, must file by April 15 unless they’ve applied for an extension. U.S. surveys have shown the tax-filing deadline is among the most stressful days of the year.

A study published in the Journal of the American Medical Association in 2012 based on three decades of data found the number of fatal traffic accidents increased on tax-filing day, similar in magnitude to alcohol-fuelled Superbowl Sunday.

“One explanation is that stressful deadlines distract drivers and contribute to human error [a national poll suggested that tax day was the second most stressful day in 2011],” the study concluded.

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Canadians seem more laid back. A survey done by H&R Block about a decade ago found most didn’t find doing their taxes particularly stressful. More recent polls done for the company indicated a vast majority planned to file their taxes about the same time as usual and only a tiny fraction – two per cent in a survey this year – are very worried about having their returns reassessed or, worse, facing an audit.

In Australia, tax disputes have led to suicides

Compare that with Australia, where tax disputes reportedly have led to suicides, according to testimony before a parliamentary inquiry last month.

Some of the stress reduction here may be due to the easier filing options, such as EFILE and NETFILE. A shrinking percentage of us fill out returns by hand, according to the CRA – just 22 per cent last year, compared with 40 per cent in 2010.

The days of headlong rushes to deposit tax-return envelopes at local tax offices before midnight on the final day seem a relic of the past. Battista recalls witnessing a traffic jam in front of one downtown Vancouver office just a few years ago.

“People were stopping in the middle of Pender Street, jumping out of their cars and running over to give the guy their papers,” she said in an interview. “I thought, ‘wow, I’ve never seen anything like it.’ “

Still, for some of us putting off filing our tax returns is not healthy, says Dr. Megan Jones, a psychologist with Stanford Medicine in California and a contributor to Lantern, an online program aimed improving emotional well-being.

For people facing financial stress in their lives, tax deadlines can bring to a head the things you’ve tried to avoid dealing with, she told Yahoo Canada News.

“If you have something that is a defined date, you have to come face to face with it,” she said.

Financial stress has become acute in the U.S., according to studies by the American Psychological Association.

“It’s actually the leading cause of stress; it’s always No. 1,” she said.

For people who struggle to pay the rent, mortgage or other bills each month, taxes just add to the anxiety.

“I don’t think the stress is about meeting the deadline as it is about you have to face the reality of your financial situation, which can be pretty overwhelming for people who are already stressed out about money,” said Jones.

Avoiding the tax-filing chore can hurt relationships

Avoidance can trigger unhealthy behaviours, such as drinking, increased smoking, inactivity and problems with relationships she said. It only makes things worse because people feel even less in control of their finances.

“And when we feel like we’re not going to be good at something or we feel guilty about not having been more proactive, that causes the secondary negative emotion,” said Jones. “That keeps getting you further and further away from being able to think clearly and problem-solve.”

The inevitability of tax deadlines means ignoring the problem won’t make it disappear. Then, when you’re forced to confront it “you’re going to face it with high anxiety and self-doubt, and feeling less effective,” said Jones.
“And when you pair that with a bureaucratic process, it can be overwhelming for people.”

Battista said H&R Block’s business comes in waves from early February when the first T slips arrive, March, when RRSP and other investment forms show up, to late April, when the last-minute filers – the procrastinators or people with complex returns – show up. Some people wait to the very last minute on principle, she said.

Filing past the deadline can have adverse consequences even if you don’t owe money, Battista points out. Calculations for things like GST rebates, child benefits and guaranteed supplementary payments for seniors are based on the latest tax year.

“You’re just leaving your money on the table,” she said.

Even if you plan to file electronically at the last minute, Battista recommends having all receipts in order in case of a reassessment, which carries a 28-day deadline for response. That goes especially for income T slips. Repeated failure to report income can result in large penalties over and above the tax and interest owed.

Jones said people who feel intimidated by the challenge of compiling their returns can avoid procrastinating by breaking the job into a series of smaller tasks done over several days. Once the day’s task is finished, put the file away. It’s a confidence-builder, she said.

“Anytime you’re faced with a process that can seem daunting or complicated, what you want to do is set very small, achievable goals and milestones,” said Jones.

“That’s going to both help you start to tackle it and move forward, and it’s simultaneously going to boost your self-efficacy, which means your belief in your ability to be effective.”.

Jones has posted some tips on dealing with financial stress on Lantern.