In a Nutshell
Americans generally approach tax season with some trepidation. But they’re feeling less anxious about the 2020 tax season than they generally do, a Credit Karma survey reveals. Still, some who do report tax season anxiety say it significantly affects their lives, triggering things like sleep loss and stress eating and putting a strain on relationships.Filing taxes under new tax reform laws for the first time made the 2019 tax season challenging and confusing for many.
But a Credit Karma survey indicates Americans may be feeling better about the upcoming 2020 tax season.
Fewer Americans report feeling somewhat or very anxious about the 2020 season than they generally feel heading into tax season, our survey found. Further, more than 60% of respondents say they’re confident they can file their own taxes. (Learn about our methodology.)
Still, despite having less anxiety and some confidence, people are still afraid they’ll make a mistake on their taxes — possibly because nearly half of respondents think filing taxes is confusing.
Key survey findings
| Respondents are feeling less anxiety about the 2020 tax season than they normally do when tax season rolls around. Just 21% say they’re very or somewhat anxious about filing next year, versus 33% who generally feel that way during tax season. |
| 65% of tax filers said they feel confident that they can file their own taxes, but nearly half of all tax filers (46%) still fear they might mess up on their taxes. |
| For respondents who generally feel very or somewhat anxious around tax season, their top anxiety-inducing fears included getting a big tax bill (27%) and not getting the refund they depend on (19%). |
| 15% of tax filers who generally feel very or somewhat anxious around tax season say tax-season stress causes them to eat more, while 17% say they lose sleep during tax season. |
What causes people to feel anxious about their taxes?
Although tax filers feel less stressed about the upcoming 2020 tax season compared to other seasons, the fears they do have are significant, our survey found. The main source of anxiety seems to be the fear of messing up on their taxes, as nearly half (46%) of all tax filers say this is something that concerns them.
This was also reflected among respondents who reported feeling very or somewhat anxious about filing taxes in general. When we asked what causes the most tax-related anxiety for them, a fear of messing up was the second-biggest reason. The list of their top anxiety-inducing tax fears includes:
- Owing a lot of money when they do their taxes (27%)
- Messing something up (23%)
- Not getting the refund that they depend on (19%)
- Being taken advantage of by their tax preparer (8%)
Another reason Americans may feel anxious about tax season: Tax myths.
For example, nearly a quarter of respondents from our survey (24%) said they believed they would go to jail if they made a mistake on their taxes. Meanwhile, almost a third of respondents (32%) said filing their taxes incorrectly would negatively impact their credit score, and over a quarter (27%) said filing taxes incorrectly would show up in their credit reports and criminal or court background checks.
How does tax-season anxiety affect Americans?
Those who report feeling very or somewhat anxious about filing taxes in general also say it affects multiple aspects of their daily lives. In addition to eating more and sleeping less, tax-stressed respondents named a number of other ways anxiety affects them during tax season:
- More than a third (34%) curtail their spending, fearing that they’ll owe come Tax Day. Those who limit spending are skipping dining out (61%), shopping for clothes (52%), ordering take-out (47%) and travel (45%), among other activities
- 20% of respondents feel more tense around family and friends
- 13% argue with their spouse or significant other more
- 12% say their work productivity and physical activity suffer during tax season
- 9% admit to drinking more
What worries people more than taxes?
Tax season anxieties notwithstanding, most respondents (65%) say they feel confident they can file their own taxes. Instead of worrying about their taxes, survey participants pointed to other aspects of their financial lives as being more stressful.
- 28% are more worried about personal debt
- 24% are concerned they won’t have enough saved for retirement
- 13% are more anxious over saving in general
- 10% are most concerned about paying rent or mortgages
What might this all mean?
Less stress around the upcoming tax season may seem like a positive development — but only if people are less anxious for the right reasons.
The 2019 tax season was a stressful one for many because it was the first year the sweeping changes of the Tax Cuts and Jobs Act took effect. Now that those changes aren’t so new, some people may be feeling less anxious about the 2020 tax season.
It’s also possible Americans underestimate the importance of taxes to their overall financial wellbeing. Instead, they may be focusing their anxieties on other aspects of their financial lives, such as debt and savings. While those considerations are certainly important, it’s a mistake to overlook the impact of federal income taxes throughout the year.
Understanding how federal income taxes work could help taxpayers feel less anxious about tax season. Survey respondents seem to agree: Nearly a quarter say more education about taxes would help alleviate their tax-season stress.
Methodology
On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in November 2019 among 1,050 American adults to better understand their relationships and attitudes toward filing taxes.