5 Benefits of Filing Taxes Online

Remember when filing your taxes meant visiting the library to pick up a pile of paper tax return forms and instruction booklets, and hoping you chose the right ones? And then mailing the forms in a big thick envelope and hoping they’d be postmarked and received on time? And of course you’d then have to wait weeks or months for a paper check — or worse, you’d find out you’d made a mistake and owed more than you thought.

For many reasons, most taxpayers left that old method of filing taxes behind many years ago. There are very few benefits to paper filing and five major reasons to file your next tax return electronically.

Electronic Filing Will Become Mandatory

One of the most important reasons to file your taxes online is that it will soon be a requirement for federal filing. There are some exceptions, but the Internal Revenue Service, or IRS, encourages taxpayers to efile and it will soon become mandatory.

Electronic Filing Is Faster, Cheaper, and Greener

Filing electronically substantially reduces the amount of paperwork the IRS receives annually. Since no paper is involved, the carbon footprint of an electronic return is substantially smaller than that of a paper return. It also facilitates sharing between IRS departments and their agents. Reviewers, auditors, and so forth, can notate the account electronically and then pass it to other departments.

Mailing a tax return, particularly a large one, with proof of delivery can be expensive. In addition, even with delivery confirmation, there is a risk that the return will be misplaced. Since you need to file both a federal and a state tax return, your mailing costs are doubled.

With electronic filing, you will receive a transaction number with the date and time that the return was submitted and the date and time it was accepted at the IRS. This protects you and eliminates the dreaded notification that your tax return was not received.

Income tax software is a one-time purchase; annual updates are usually a fraction of the original cost. Tax returns that are prepared by a professional tax specialist can easily cost hundreds of dollars; income tax software costs a fraction of that.

Even if your return is complex, you should be able to find software to help you prepare it and the cost savings will be considerable over using a professional income tax preparer.

Electronic Filing is Easier and More Accurate

In order to file your return electronically, you must prepare it electronically. Tax return software such as TurboTax or TaxACT will double-check your return before you submit it to ensure that vital information is not missing and that all necessary documentation is included. You will not need to mail a copy of your 1099, W-2, or other paperwork, you will only need to keep it for a few years.

In addition, when you file your taxes online, the software will take all the information from your federal return, which is prepared first, and automatically transfer it to your state tax return. This is an immense savings in effort and error; the built-in checker will let you know of any errors in both the federal and the state return before you file them. Most software will remember your information from the previous year and import it, which is definitely a timesaver.

Once your return is completed, you can file it directly from the software program you are using, or your income tax preparer will file it electronically. Either way, once you have the necessary information, electronic filing takes just seconds.

Your Refund Will Be Received More Quickly

Perhaps one of the most important reasons to file electronically is that your income tax refund will be received much quicker. You will need to include your deposit information on the tax return in order to receive the refund. Usually, refunds for returns that are filed electronically are received up to two months faster than refunds for returns that are mailed in.

Your Privacy Will Be Protected

Filing your income taxes online is safer than mailing them in. Income tax software has many layers of secure encryption that protect your sensitive information. When you hit send on the income tax software, your information is transmitted directly from your computer to the IRS servers.

When you mail your tax return however, many individuals handle it and there is the possibility of the return being intercepted and used for identity theft or other nefarious purposes. Not only will your identity and sensitive information be compromised, the IRS will not receive your return and that will cause you problems.

With so many reasons to file your income taxes online and the availability of software from simple to complex, there really is no reason not to file your taxes online. For more information on efiling your taxes, visit the IRS’s website here.