Category: Tax Tips
What are the Benefits of E-Filing Your Income Tax Return?
These days, you can do everything online. Need to do some shopping? You’ll probably head to the internet before you head to your local mall. Need to pay your bills? Forget about envelopes and stamps—just log in to your various accounts, make your payments, and be on your way. It's abundantly clear that the internet has made life easier in countless ways, and e-filing your taxes is yet another example of that.
It is true that you can still file your taxes the "old fashioned" way, filling out the appropriate forms by hand and mailing them in. But it is hard to understand why you would go through the trouble when you consider the many benefits of e-file. If you are not yet convinced that e-filing is the right option for you, we may be about to change your mind. Let’s take a look at five notable benefits of e-filing your federal income tax return.
1. Ease of Use - Filing taxes has long been considered a complex, head-scratching endeavor. Few people think of taxes as being simple and straightforward, but that is exactly what they become when you choose to e-file. Thanks to advanced tax software, completing your return is often no more complicated than answering a series of questions. As long as you have all of the necessary paperwork on hand—like your W-2 and other forms—the entire process can be completed in a single sitting.
When you e-file, you won’t have to concern yourself with finding the right box on the right form. In fact, you won’t really see the forms at all. Instead, you will be walked through the tax-filing process step by step, as if you were working with a tax professional. Your only job when completing your electronic tax filing is to answer the questions accurately, honestly, and to the best of your ability. As long as you do your job, the software will take care of the rest.
2. Faster Refunds - No one likes to wait for money. While you might not be in any hurry to file your taxes if you expect to owe, there is no reason to wait if you expect to be entitled to a refund. By choosing to e-file, you can plan on seeing your refund in your bank account much sooner than if you send in your return through the mail.
By e-filing income tax returns, you will be able to request the direct deposit of your refund into your bank account. So, instead of having to wait for the IRS to cut a check and mail it to your home, you can just watch your bank account to see when the money arrives. This will usually shorten the process, allowing you to receive your money sooner than you would have otherwise. Whether you are going to spend that money or just put it away in savings, it is always nice to have it sooner rather than later.
3. Security - If you have been filing your tax returns by traditional mail for many years, you might be hesitant at first to trust the e-filing option. After all, there are plenty of stories on the news regarding cybercrime, and you don’t want your sensitive personal information to fall into the wrong hands.
However, it should be noted that sending your return through the mail is not exactly the most secure option in the world, either. While no method is perfectly secure, most would agree that your information—and your money—will be safer if you opt for the e-filing approach.
Think about the journey your return has to make when you decide to file a paper return. First, you have to print out and complete all of your forms. If you have a tax liability, you’ll need to include a payment with your return (or you could make the payment online, while still sending the physical return in the mail).
Once mailed, the return is going to be handled by many people as it makes its way to the IRS. In the case of a refund, you will then have your check handled by just as many people on the way back, and it will need to wait in your mailbox until you retrieve it. Needless to say, there is a lot that can go wrong during the trip to and from the IRS.
On the other hand, the process of filing an electronic return is completed in an instant. Your information will be transmitted across a secure server, and it will be encrypted as well. Sure, there is always the chance of a security breach in the digital realm, but that event is unlikely given the attention e-filing providers pay to security. And because your return will be deposited directly into your bank account, you don’t have to worry about something happening to the check before you can make the deposit.
4. Greater Accuracy-Another of the many advantages of e-file is the improved accuracy of your return. If you make a mistake when filing your return, there could be a number of negative outcomes. For one thing, you could wind up paying more tax than necessary. Or, if your mistake results in an underpayment, the IRS could come looking for additional payment—along with interest and fees. Needless to say, getting your return right the first time is in your best interest.
By using advanced e-filing software, you will automatically have your work checked for you. The calculations will be free from errors, and the software will notify you if anything looks out of the ordinary. You are far less likely to file an inaccurate return when you e-file, which means you’ll have one less thing to worry about when tax time rolls around.
5. Time Savings - Taxes are important, but that doesn’t mean you have time to waste countless hours filling out your return each year. To save time, turn to e-filing. Unless you have a particularly complex tax situation—in which case you’re also going to want the help of a professional—it should be quick and easy to file online.
The best way to save time through e-filing is to collect all of the relevant paperwork in advance. Make sure you have all of the documentation you will need before you sit down to go through the e-filing process. This way, you don’t have to stop and start while going off to look for documents. Collect everything, log in to your e-filing account, and the chore will be done before you know it.
The answer to the question "Should I e-file my taxes or mail them?" is easy for most people—e-filing is the way to go. These five benefits should provide you with all the motivation you need to go forward with e-filing your return this year. Even if you are a bit intimidated by the thought at first, just give it a try. Most likely, you will never again consider filing your return any other way.