Electronically filing your taxes can be a great asset to many people. Using technology to instantly send the IRS your tax forms can be fast, efficient and easy. However, the system is far from perfect and there are a lot of downsides to using it--increased security risks, technical issues and the financial cost that it may engender for some users. Just how much of a boon it is to each user needs to be weighed based on individual circumstances.
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The first major advantage of using electronic filing is that it's much, much faster than using regular postal services. Using the Internet to e-mail your tax forms to the IRS can be done in minutes rather than in days or weeks. Additionally there's no cost from having to pay for postage. The speed that you get your refund is much faster when you use electronic filing. It does require that you provide your bank account so that a refund may be transferred.
Filing your tax forms electronically is not as safe as sending them via post. For those who use a third-party service to electronically file their taxes that third party may keep tax information on file for a long time, which means that more people have access to it. If you're going to be getting a tax refund and you want it as fast as possible, you're going to have provide your bank's routing number and your account number for direct deposit. For those who want fewer people to have their information on file, traditional, physical tax forms are the best course.
According to nacubo.org, electronic filing of tax forms is more efficient than filing physical tax forms. This efficiency comes from the various checks that electronic tax forms undergo. The program the forms are filled out on will perform a check and IRS computer systems will perform a second check. By the time that the forms are checked over by an actual, living agent, most of the errors have been found and corrected. According to the IRS, in 2005 there was a 1-percent error on Form 990 when filed electronically, but there was a 30-percent error for those filed physically.
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