This guest post is from PT of PT Money: Real Personal Finance for a Life Without Limits! Check out PT’s latest post about using a joint savings account.
PT is a pretty interesting guy with a blog that you should subscribe to. He also has a finance rap video which I featured here a long time ago – if you haven’t seen it then I insist that you check it out.
It’s tax time again! What are you going to do this year? Stick with the old school method of filing by mailing in your forms? Or are you going to try this new thing called e-filing (now a 20 year old process)?
Don’t worry. I won’t beat up on you non e-filers too much. There are actually a few reasons why mailing your forms may make sense and even be required. Let’s look at the differences between the process of e-filing and mailing in your forms.
The Traditional Filing Process
Before e-filing was around (pre-1990), everyone mailed their tax forms to the IRS. Even if you use fancy tax preparation software, you can still print out your completed tax forms and stick them in an envelope addressed to the IRS. It’s a simple process as old as the idea of paying income taxes.
What is E-Filing?
Last year, the IRS’s e-file processed 95 million tax returns. That’s 66% of all the returns that were filed. E-Filing is simply taking an electronic version of your tax return and sending it using the Internet directly to the IRS data processing center.
Advantages of E-File
There are many, well noted reasons for e-filing. It’s faster, easier, you get your refund quicker, no trips to the post office, no stamps, less chance for error, and the list goes on. It’s obvious that the case has been made for e-filing. But what about security?
At first glance it might seem less secure to e-file your taxes. After all, you are sending your personal information, income data, and credit card or bank account information from your computer, over the Internet to another computer to be processed. That’s not the kind of data you want to be careless with, right?
But it’s actually less secure to mail your return. Data transferred using tax software to the IRS is going to be encrypted. Plus, both the software companies and the IRS have strict privacy policies that their reputations depend upon. Tax returns get lost or stolen in the mail every year.
One advantage of efiling is that tax software programs such as TurboTax will help you with recent tax changes or new tax deductions which you might not know about yet.
Advantages of Mailing Your Forms
Mailing your return is less expensive than e-filing. There are some people who qualify for free federal tax filing, but most people have to pay a fee to have their taxes e-filed. State e-filing can be especially pricey.
It takes longer. If you owe money on your taxes, the last thing you want to do it rush the job. Wait till April 15th and mail in your paper forms along with a check. Hold your money as long as you can. Mailing will always be the method of choice for those who owe. Especially when the IRS has the nerve to charge a convenience fee for those paying with a credit card.
Who’s Required to Mail in Their Forms?
Lastly, there are some people who have to mail in their tax forms this year. You must file by mail if:
- You are claiming the first time home buyer tax credit on your 2009 return. Since you have to mail in your closing settlement papers, a physical mailing is required.
- Another filer has already claimed your dependent as theirs, and you need to dispute this.
- You have some type of dispute about your date of birth with the SS Administration.
- You are filing an amended tax return.
So what’s it going to be this year? E-File or Mail? I’d love to hear your thoughts in the comments below…
If you want to read more posts from PT then check out his blog PT Money and consider subscribing to the feed.