When it comes to tax season, there is nothing like making what can sometimes be stressful – a little bit easier. One way of doing that is by e-filing and here are the benefits of e-filing your state and federal tax returns. As with anything, there are pros and cons and we will address both with a focus on the benefits but an inclusion of the things to be aware of so that you have the most information when making a choice.
Speed. One of the major benefits of e-filing is that refunds come back much quicker. The processing time is a day or two with the refunds taking a week to 10 days on average. When submitting a return by mail, you are looking at about six weeks. Direct deposit makes the process faster too; if you wait on a check to be mailed, you are looking at a longer waiting period in addition to the wait with paper filing.
Accuracy. One of the major benefits is accuracy. Since electronic tax returns are easier to correct, you also have the benefit of online programs checking your math and data entry errors as well. Plus, the IRS actually has statistics showing that paper returns have an error rate of about 1 out of every 200 while electronically filed returns show just 10 – 21%. Some software even has a check at the end that goes over any red flags or things you have missed.
Record Keeping. It is much easier to work with electronic paperwork rather than trying to keep up with a stack of paperwork – especially when you are trying to enter data. And in some cases, the software you are using can auto-fill the data you have from prior years.
Confirmation. There are few things that make people more anxious than wondering about their tax return. With e-filing, you stay in the know about when it has been received, when it is being processed, and even when the deposit is being made. When you send in one via a paper return, once you mail it, you can check online if you have a refund but the process is not as streamlined and you do not have automatic notifications.
Low Cost – Smaller Footprint. One of the things about e-filing is that you are using less paper so you have a smaller carbon footprint. And as far as cost, you are saving on postage, printer paper and ink, and even gasoline to make a trip to the post office.
While e-filing is the best way of sending in state and federal tax returns in most cases, there are a few things to be aware of.
You Can’t Always E-File. It’s not the norm but there are instances where due to the complications of your return, you may not be able to file electronically.
Audit Risk. This is simply conjecture but some believe that you may get audited faster if you file electronically. This is supposedly because the paper returns sit around longer.
Security Risks. Some feel that it is safer to send your tax return in by mail which is more secure than what is one your computer where it can be hacked. This is obviously not the norm but it is something that can happen and in order to make the right decision for you, you should be aware that a security breach can happen. One way to help lessen this risk is to choose software that has the Authorized IRS e-file Provider label.
If you want to know anything about filing your state and federal taxes or simply have questions about what we can do for you, simply contact us and we will be glad to help.