This mistake makes you 21 times more likely to mess up your taxes
Some people are quicker to embrace technology than others, which explains why a large chunk of Americans continue to file their taxes on paper despite the option to do so electronically. If you're used to filing a paper return, you may be inclined to go that route this year as well. But if you do, you should know that you're 21 times more likely to make a critical mistake.
According to the IRS, 21% of paper returns sport some sort of error, while fewer than 1% of electronically filed returns contain mistakes. But there are consequences to submitting an erroneous return. For one thing, the IRS might reject your return entirely, or delay any refund you're due. Your return could also get flagged for an audit if you mess up your math and your numbers don't match what the IRS has on file.
If you'd rather avoid that fate this tax season, do yourself a favor and file your return electronically. You may even be eligible to do so for free.
The problem with paper returns
We're all human, and that means we all have the potential to make a major math mistake on our tax returns. In 2014, the IRS found close to 2.3 million math errors across 1.7 million returns from the previous year.
Now filing your taxes electronically won't prevent you from, say, copying the wrong number into a specific box, but it will help you avoid basic addition or subtraction-related blunders. And that could spell the difference between having your return processed quickly or dealing with an IRS headache.
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See, the IRS has its own software that's designed to pick up on mismatches in taxpayer income. Any time you receive an official tax form (like a 1099) showing what you were paid, the IRS gets its own copy. If the IRS is told that you earned a certain amount of income, but you list a smaller amount because your brain miscalculates the total, your return is likely to be selected for an audit.
You should also keep in mind that a math error might work against you in terms of your assumed tax liability. Say you're trying to calculate a deduction and you wind up entering a lower amount than you're eligible for because, once again, you simply mess up your math. In that situation, you're the one who will end up losing out -- not the IRS. Though electronic returns don't completely eliminate the possibility of an error, they can lower your chances -- and save you a world of hassle in the process.
Other reasons to go electronic
Errors aside, there are a few other key benefits to filing your return electronically. For one thing, most tax software is designed to help you identify deductions and credits that could significantly reduce your tax liability. For example, if you're a lower earner, you might be eligible for the Earned Income Tax Credit, which could put up to $6,318 back in your pocket this year. Furthermore, most of today's software is equipped to identify audit-triggering activity to help you lower your risk. Paper returns offer no such features, so when you file one, you're on your own.
Finally, filing your taxes electronically will, in most cases, help expedite the refund process. The IRS typically issues refunds for electronically filed returns within three weeks. Paper returns, on the other hand, take much longer to process, and if you're due a refund, you could wind up waiting anywhere from six to eight weeks to get your hands on that cash.
Not only does the IRS process refunds for electronically filed returns faster, but it also updates its refund status information within 24 hours of receipt. If you file your taxes on paper, you'll typically need to wait a solid month before your refund status becomes available.
Filing your taxes electronically won't just reduce your chance of making a serious error; it will also make the entire process run smoothly from start to finish. And, if you earn less than $64,000 a year, you can file your taxes electronically at no cost using the IRS Free File tool -- which means you'll not only get to avoid the rush at the post office, but you'll knock out your taxes for less than the cost of a stamp.