On Tuesday, January 19, 2016 the IRS announced they will be accepting both paper and electronic tax returns.
And due to Washington D.C.’s Emancipation Day falling on Friday April 15, 2016, and it being a weekend, taxpayers will have until Monday, April 18, 2016 to file their tax returns. However, those taxpayers who live in Maine and Massachusetts will have a deadline of Tuesday, April 19, 2016 due to Patriots Day.
The IRS anticipates they will receive over 150 million individual returns in 2016, with more than 4 out of 5 of those returns electronically filed using tax return preparation software. The IRS reports that they will be accepting and reviewing tax returns on a first in, first out basis…whether or not you file by paper or electronically.
The Pros & Cons of e-Filing Taxes
This tax season you may be considering different options for filing your tax return.
Over the years, there has been a major paradigm shift in how Americans file their income taxes. According to efile.com statistics, in 2007, only 57% or 80 million Americans filed their returns electronically, while in 2015; that number increased to approximately 91% or 128 million Americans who filed electronically.
There are benefits to filing your taxes using an online service such as: TurboTax, TaxACT, H&R Block, TaxSlayer and eSmart Tax; they can be less expensive, and quite educational, since you’re learning how the tax filing process works first hand. However, a drawback to filing online is that any errors in your tax return are your responsibility to take care of.
Here are some other pros and cons for filing taxes electronically:
Fast: An electronic tax return will be accepted by the IRS within 1 or 2 days. As an e-filer, you will receive an immediate confirmation via email or text message that the IRS has accepted your return. According to the IRS, the majority of refunds from electronic filings are processed within 21 days. Those individuals filing simple tax returns with direct deposit may receive their refund in as little as 10 days.
Nearly Error Free: It’s estimated that up to 21 percent of paper returns contain errors, while the IRS has stated the error rate for electronic returns is about 0.5%. Most e-filing tax software programs are designed to catch math and data entry errors.
Less Expensive: According to the IRS, if your Adjusted Gross Income (AGI) is $62,000 or less, you may be able to use their Free File software.
Convenience: Many software programs save data you’ve entered from previous years making it easier and faster to file your taxes for the new tax year.
Limited: Some software programs may be limited in scope for complex returns. For complicated tax returns, it may be best to complete your taxes via a paper filing with a tax professional’s assistance. Also, there are still some IRS tax forms that are paper based and are not yet available in electronic format.
Here’s a complete list of IRS forms available for electronic filing and those forms with known limitations: www.irs.gov/uac/List-of-Available-Free-File-Fillable-Forms.
Security: Unfortunately, there’s always a slight risk of fraud or identity theft when sending your personal information online. It’s best to make certain your computer’s antivirus software is kept up-to-date.
Additional Fees: You may incur an additional fee to file your state tax returns through some software programs.
Advertisements: While going through the process and steps to complete your taxes using a software program, you’re very likely to receive many advertisements for other services offered by the software company your using. These ads may impede the filing process somewhat.
Ms. Dakar is the author of The Busy Person’s Guide to Personal Finance, a primer to help consumers manage their finances so they can build a substantial nest-egg. She also conducts personal finance seminars where she provides concepts to attain overall financial health.