As we inch closer to another tax season, some of the tax payers may be facing a decision how to file the tax return: electronically or on paper. There has been a slow but steady transition to file taxes electronically for a few reasons. One is that it is arguably faster to complete the return, submit it, and get the refund. It is often enough to enter personal information once and the electronic forms auto populate all the required fields. This saves time and a taxpayer only needs to verify the accuracy of the information, i.e. social security number, once. It has also become less expensive, and in many instances free, to file the returns. The IRS has partnered with private businesses allowing qualifying individuals to file for free. It is commonly known as FreeFile and there is a tool on the IRS website to quickly determine whether or not an individual or a family qualifies to file for free.
And while on the topic of filing electronically, there are couple of other options to use this method. If you need help going through the process or this is your first time filing electronically and need guidance, you may find help through the Tax Counseling for the Elderly (TCE) or the Volunteer Income Tax Assistance (VITA).
The second important aspect of filing electronically is decreasing, or outright eliminating, committing errors on the tax return. Common tax return errors include:
- Selecting incorrect filing status.
- Not entering the social security number.
- Not spelling the names of dependents exactly how they appear on the social security card.
- Name change – if your name changed during the year, make sure to contact the Social Security Administration and update it accordingly before filing the tax returns.
- Credits and Deductions – taxpayers often incorrectly claim Child Care Credits, Premium Tax Credit, or special Standard Deductions for people who are senior citizens or blind.
- Incorrect calculation of Social Security benefits, IRA distributions, pensions, annuities.
- Math errors.
- Entering incorrect bank routing or account number.
- Forgetting to date.
- Forgetting to sign the return.
If the erroneous information is entered on the tax return, it is returned to the preparer to make the corrections. It is unnecessary strain on resources, both the government’s and potentially your own.