By: Shiyun Ye, CFP®, MFinA
Tax season, to me, feels like running a marathon that requires preparation all year long. Then suddenly, you find yourself at the finish line, catching your breath and thinking, “Yes, I did it.”
That’s the ideal scenario.
More often, though, I’m standing at the finish line just grateful I survived – because maybe I didn’t train enough for 5 miles, or I wore the wrong pair of sneakers, or I forgot my fanny pack and had to hold my phone the entire race (don’t ask me how I know that).
As someone who works closely with individuals on financial planning, I sometimes lie awake thinking about last-minute client requests for tax documents – and that’s not a kind of stress anyone enjoys. Tax season doesn’t have to feel that way. With a bit of preparation, you can avoid unnecessary stress and unpleasant surprises. Let’s save everyone a little sleep deprivation this year by taking a more proactive approach.
Below is a practical, easy-to-follow checklist to help reduce April stress and regain control of your finances. Recently, I had the opportunity to speak to an MBA class at Columbia University about tax planning for international students – an area close to my own experience. That conversation inspired me to include a few international tax reminders in this article as well.
1. Get Organized Before You File
One of the biggest causes of tax-time anxiety is disorganization. Missing forms, overlooked deductions, and last-minute scrambling can lead to costly errors – or even overpaying.
Start by gathering your documents early:
· W-2 forms from employers
· 1099 forms for freelance, contract, or investment income
· Mortgage interest statements
· Student loan interest statements
· Receipts for deductible expenses
· Records of charitable contributions
If you’re self-employed or run a small business, maintaining organized income and expense records throughout the year is essential. Accounting software – or even a well-maintained spreadsheet – can dramatically simplify tax preparation.
Organization isn’t just about paperwork; it’s about clarity. When you clearly understand your income sources and potential deductions, you’re far less likely to face an unexpected tax bill.
A Note for International Students
In general, students on F-1 or J-1 visas are typically considered nonresident aliens for tax purposes. The first step is to determine your tax classification—for instance, F-1 students are usually treated as tax-exempt nonresident aliens during their first five calendar years in the U.S.
If your situation is more complex – or if you’re unsure about your tax residency status – it’s wise to consult a professional who specializes in international taxation before April approaches.
2. Review Last Year’s Return
Your previous tax return is one of the most helpful planning tools you have. Before filing this year, review last year’s return and look for:
· Income sources you may have forgotten
· Deductions or credits you claimed
· Any underpayment penalties
· Changes in filing status
Life events often carry tax consequences. Marriage, divorce, a new child, buying a home, starting a side business, or changing jobs can all significantly impact your tax liability.
Comparing last year to this year helps you identify what’s changed – and anticipate how those changes may affect your final numbers. The more familiar you are with your tax patterns, the fewer surprises you’ll encounter.
A Note for International Students
If you have never filed a U.S. tax form before, check with your school’s international student office. They may assist with or remind you about filing Form 8843, which informs the IRS that you are in the U.S. under an exempt visa status and had no U.S. income.
If you did earn U.S. income as a nonresident, you would generally file Form 1040-NR.
3. Adjust Your Withholding – Before It’s Too Late
One of the most common April surprises is discovering you owe more than expected. This situation typically happens because not enough tax was paid throughout the year.
If you are a W-2 employee, your withholding is determined by your Form W-4. If you received a large tax bill last year – or even an unusually large refund – it may be time to adjust it.
A large refund can feel like a bonus, but it often means you gave the government an interest-free loan. On the other hand, under-withholding can result in penalties and unexpected payments.
If you are self-employed or earn significant side income, quarterly estimated payments become especially important. The IRS operates on a “pay-as-you-go” system. Taxes are expected in April, June, September, and January. Since self-employed individuals do not have employer withholding, the IRS considers unpaid quarterly amounts as late payments and may charge interest – even if you pay everything in full by April.
A helpful guideline, often called the “safe harbor” rule, is that you can generally avoid penalties if you pay at least:
· 90% of your current year’s tax, or
· 100% of last year’s total tax (110% for higher-income earners)
· Through withholding and/or estimated payments.
Checking your withholding mid-year – not just during tax season – can smooth your cash flow and prevent dramatic swings.
A Note for International Students
Most international students typically receive only a W-2. However, if you are on F-1 status and have been in the U.S. for fewer than five calendar years, you generally should not have Social Security and Medicare taxes (FICA) withheld. If you notice those deductions, you may need to address them with your employer.
4. Maximize Credits and Deductions
Tax law is complex, and many people miss valuable credits and deductions simply because they don’t realize they qualify. Common areas to review include:
· Child Tax Credit
· Earned Income Tax Credit
· Education credits
· Retirement contributions
· Health Savings Account (HSA) contributions
· Energy-efficient home improvements
For example, contributing to a traditional IRA before the filing deadline may reduce your taxable income. HSA contributions (if eligible) offer both tax-deductible contributions and tax-free withdrawals for qualified medical expenses.
Tax credits are especially powerful because they reduce your tax bill dollar-for-dollar – not just your taxable income.
If your financial situation involves rental property, stock sales, or business ownership, consulting a tax professional may uncover opportunities you might otherwise miss.
A Note for International Students
For international students under nonresident status, remember that you are generally not eligible for the standard deduction (with limited exceptions). Claiming a credit you’re not eligible for can cause delays or audits. That’s why verifying eligibility before filing is crucial.
5. Plan for Next Year
The best way to reduce April stress is to think beyond April.
Once your return is filed, don’t simply move on. Reflect on the outcome:
· Did you owe more than expected?
· Was your refund larger than necessary?
· Were there penalties?
· Did you miss any deductions?
Use those insights to build a strategy for the coming year.
For example:
· Increase retirement contributions to reduce taxable income.
· Adjust estimated tax payments.
· Set aside a percentage of freelance income in a separate savings account.
· Track deductible expenses monthly instead of scrambling at year-end.
Final Thoughts
Tax season doesn’t have to be overwhelming.
By getting organized early, reviewing past returns, adjusting withholding, maximizing credits, and planning ahead, you shift from reactive to proactive. That shift alone can significantly reduce anxiety and improve your financial confidence.
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The above article was written with the assistance of artificial intelligence (AI).