It has been no surprise that the number of people embracing the convenience of filing taxes online (i.e. E-Filing) has increased significantly in the past couple of years. In fact, according to the IRS, 90M people used E-File for their tax returns in 2008. If you want to join the crowd, below are some factors to consider in deciding on whether or not to file your taxes online.
What Are The Perks of E-Filing
1) Tax Refunds Come Quicker!
That’s right; you will receive your tax refund in about half the time or as fast as 3 weeks after filing your return. Why? Because everything is processed faster since no mailing is involved & all of your tax information is sent electronically.
2) Immediate Proof Of Receipt
You will receive a receipt for filing your taxes online and a confirmation number should your tax information inadvertently get misplaced.
3) Less IRS Errors
Since the IRS doesn’t have to re-enter data into the system, there is a lower probability of the IRS making errors.
4) Less Taxpayer Errors
Generally speaking, taxpayers are less likely to commit errors as many of the most widely used e-file programs (i.e. IRS E-File Program, TurboTax, TaxAct, TaxComplete) point out mistakes before the return is filed. They are NOT full proof though so also check the tax information yourself. Please also note that some of the software programs are free to file a federal tax return but most require you to at least pay to file a state return.
5) Eco-Friendly & Cheaper
Less paper, printing & mailing expenses to the taxpayer & the IRS.
Risks For E-Filing
1) Taxpayers Become Too Reliant on Tax Software
Many taxpayers & preparers may become too reliant on the tax software by letting the programs do the work and not double checking the numbers themselves. Programs can make mistakes as well and it is possible there could be a mistake in the data you entered online. E-Filing was designed so that processing a tax return would be quicker, more convenient and cheaper. It wasn’t designed to replace the amount of thought & care put into filing a tax return especially for complicated issues like transferring stock investments in IRAs. Make sure you double check.
2) Less Hard Copy and Backups Maintained
Many taxpayers may also forget to print hard copies of their tax returns & also maintain a soft copy on a flash drive or other computer storage device should the tax return become misplaced. Please maintain backup copies of your returns in multiple secure locations as the law doesn’t really protect you if your files are misplaced.
3) Taxpayers May Use Community Computers
There is a risk that many taxpayers without access to a personal computer may use community computers at libraries and other public places. There is a risk that your identification can be compromised on one of these networks, so try to use a more secure resource or file your tax return via mail.
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