Nowadays, it seems like everything is being done electronically, and taxes are no exception. While many taxpayers prefer to go the paper filing route, there are several benefits to submitting your tax return online. In fact, the IRS has a Free File tool that lets lower-income taxpayers electronically file at no cost. If you're planning to file a paper tax return this year, here are four reasons to change your tune.
1. You're more likely to make a mistake
Math errors happen to the best of us, but they're especially likely when you're doing your taxes by hand. Unfortunately, even an honest mistake could spell trouble and cause you undue stress. You might, for example, have your refund delayed or your taxes audited if you fall victim to simple math. The IRS reports that the error rate for paper tax returns is as high as 21%, whereas it's less than 1% for electronically-filed returns. While filing electronically won't guarantee that you won't make an error (you're still required to input the correct numbers), it can certainly lower your chances.
2. You might miss out on valuable tax credits or deductions
One benefit of using tax software is that it will often steer you toward tax credits or deductions you otherwise may not know about. For example, if you're a low earner, you might be eligible for the Earned Income Tax Credit. Parents, meanwhile, can explore the Child Tax Credit and the Child and Dependent Care Credit.
There are also numerous deductions available to taxpayers, such as write-offs geared toward homeowners, medical expenses, and charitable contributions. Most electronic programs are designed to ask questions that lead you to the right tax breaks, but if you stick to a paper return, you risk losing out on those credits and deductions -- and the money they could've otherwise saved you.
3. You'll delay your refund
A good 80% of tax filers get a refund each year, but if you submit a paper return, you'll probably end up waiting longer for your money. The IRS reports that it typically takes six to eight weeks to issue refunds for paper returns. File electronically, on the other hand, and you might see your refund in three weeks or less.
Furthermore, if you send in a paper return, you'll usually need to wait about a month before your refund information even becomes available. Submit your taxes electronically, and you'll be able to check your refund status within 24 hours.
4. You're less likely to spot audit red flags
Though less than 1% of tax returns are selected for an audit, there are certain tax moves that can increase your chances of making the list. Thankfully, much of the tax software out there is equipped to help you assess your audit risk. Many programs have tools that can help you identify audit-triggering activity so you have a chance to make corrections before submitting your return. If you file a paper return, on the other hand, you won't be made aware of potential red flags that could land you in hot water with the IRS.
Finally, though it happens rarely, when you send in a paper return, there's always the potential for it to get lost in the mail. Granted, you can have your return certified to establish a record of your submission, but there's something to be said for submitting a return electronically and getting confirmation that it actually went through.
If you are going to file a paper tax return this year, make sure to go through the process carefully, and for math's sake, whip out that calculator any time there are numbers involved. The last thing you want is to encounter a hassle as a result of human error.