Pros and Cons of Filing Taxes Online
Despite the proliferation of online tax filing programs, there is no requirement that taxpayers send their tax returns to the IRS online. The statistics, however, show that the overwhelming majority of taxpayers are making the online choice.
In 2014, nearly 118 million taxpayers filed their tax returns online, according to the IRS. That was 86 percent of all returns received by the government. The percentage of returns filed online have increased every year in the past decade and experts say more of the same is expected in 2015.
At the same time, cases of online fraud have increased dramatically. TurboTax, the huge tax preparation retailer, says some states have seen a 37-fold increase in scams – most of which are designed to steal Social Security numbers.
Before making your decision whether to file your return online, consider these pros and cons.
Benefits of Filing Taxes Online
- Faster. While the process of filling out the tax return may not be faster online for some taxpayers who are uncomfortable using a computer, there’s no doubt that once the return is completed, getting an online return to the IRS is much faster online than through the mail. It’s possible to get refunds from returns transmitted online in as little as 10 days, while refunds from returns that are mailed in usually take a minimum of three weeks to arrive.
- More efficient. Everything you need to file your tax return – each and every form – automatically becomes a part of your online return. That process is much more efficient that finding the correct 1040 form, or the form for deductions, etc., with a return that will be mailed in to the IRS. That efficiency means it’s much less likely to forget to attach any documents or corroborating information required by the IRS.
- More accurate. While you may be a math whiz, it’s hard for anyone to be more accurate or faster at tax calculations than a computer. With an online return, there’s no danger of taking a number from the wrong column for the amount of federal taxes owed or other errors that can happen when a human fills out a tax return by hand.
- Can be free. The IRS offers to accept online returns through its e-file service for free. Many tax preparers also offer free online filing, though some pass along a cost associated with the time to prepare and check the accuracy of the return.
Issues with Filing Taxes Online
- Requires some computer knowledge. No matter what tax software program you use, if you are unfamiliar and uncomfortable with computers, the process of filing a return online can be more difficult for you than writing out your return and mailing it to the IRS.
- May be more expensive. If you hire a tax service, it’s possible you may be charged to have your tax return transmitted online to the government. Even though the e-file service provided by the IRS is free, many tax preparers include a charge as part of their tax preparation costs.
- More difficult. Learning how to navigate and use a tax software program is not intuitive for every taxpayer. Some will find it difficult at first or may take some time getting used to the instructions for filling out the tax return online.
What about Online Fraud?
- TurboTax controversy. Intuit makes TurboTax software, which had more than 29 million customers in 2014. According to published reports in 2015, the number of “suspicious” returns filed online via TurboTax increased from about 900,000 in 2010 to more than 2.5 million in 2012. Scammers rely on a variety of ways to get a person’s Social Security number, file a return and claim a fraudulent refund from the government, according to the IRS.
- Be on the lookout for scams. According to the IRS, scammers commonly send what appears to be a notice from the government to taxpayers, trying to get Social Security numbers and other personal information. However, the truth is that the IRS never sends email notices to taxpayers and any request for information through an email is a scam.
- Protect your SSN. The IRS urges taxpayers to be careful when creating passwords for TurboTax and other online tax filing sites. Choose a unique password that you have not previously used and include a mix of numbers, symbols and capital and lower case letters. Regularly change passwords for your Internet accounts and make sure your computer has anti-spam and anti-virus programs and a firewall.