20% of Americans Make This Tax Mistake Each Year. Are You One of Them?
Article Published by: Time.com
With the tax filing deadline rapidly approaching, a large chunk of Americans will no doubt spend the next few weeks crunching numbers and digging up documents in an effort to be on time. But unfortunately, a good 20% of workers are gearing up to make a potentially huge mistake: filing on paper. That’s the latest from Twine & John Hancock, which also found that 53% of filers complete their returns without outside help. But while there’s nothing wrong with tackling a tax return solo, filing on paper can be a recipe for disaster. Here’s why.
1. You’re more likely to make a mistake
Sometimes, even the simplest calculation can somehow get computed incorrectly in your head. If this happens to you, and you submit a return with a glaring error, the IRS might choose to either audit your return or reject it outright. That’s why you’re better off filing electronically. The error rate for paper returns is estimated at 21%, whereas it’s less than 1% for returns filed electronically — so if you want to lower your chances of messing up, stay away from paper.
2. You’ll delay your refund
The vast majority of tax filers wind up getting a refund each year. If you’re one of them, then filing on paper could mean waiting even longer for that cash. The IRS typically issues refunds for electronically filed returns within three weeks of receipt, but with paper returns, that window expands to six to eight weeks. Now imagine you’re staring at a credit card bill you can’t pay off in the absence of your upcoming refund. Wouldn’t you rather not accrue an extra three to five weeks’ worth of interest charges?
Furthermore, when you file electronically, you can check on your refund status within 24 hours. File on paper, and you’ll wait weeks just to see when your refund will be issued.
3. You’ll get less tax help
Though using electronic software to file your taxes isn’t the same thing as hiring a professional, these programs aredesigned to offer key guidance along the way, which can come in handy if you’re a new filer or are iffy on certain rules. For example, most are equipped to spot audit red flags, thereby helping you avoid them. Many programs will also steer you toward lucrative tax credits and deductions you might otherwise miss out on.
When you file on paper, however, none of that happens. This means that if you’re claiming a disproportionally large deduction and don’t recognize that yourself, your return might land on the IRS audit list. Similarly, if you’re not knowledgeable about the various tax credits out there, you’ll risk paying the IRS more than necessary. And that’s the last thing you want.
Though there’s something to be said about going it old school and filing your taxes on paper, you’re better off submitting an electronic return and resting easy knowing you’ve lowered your chances of making a mistake, delaying your refund, and missing out on tax-savings opportunities. Besides, when you file electronically, you don’t have to stand in long post office lines or worry about your taxes getting lost in the mail — and that’s reason enough to avoid paper.
ABOUT MICHAEL SMERIGLIO:
Michael Smeriglio III is a financial specialist. A licensed CPA since 1985, Mike has been providing tax preparation services to individuals and businesses for more than 30 years through his firm located in Greenwich, CT.