E-filing is the way to go
Mar 08 '00
Nothing in the world is 100% safe...nothing I've found anyway. But filing your tax return electronically (e-filing) is just as safe, if not safer, than mailing it in. There's several ways you can complete and file your tax return and each has its advantages and disadvantages. (This editorial assumes you wouldn't otherwise take your return to a CPA or other tax preparer, that you would do it yourself one way or another.)
Traditional paper return, sent in the mail
The old-fashioned traditional paper return is certainly an option, and may be the best if you have a very simple tax return. The forms are generally sent to you in the mail or you can get them at the post office or local IRS office. Fill 'em out, attach a check if you have to pay, and stick in the mail (even though this editorial is generally about the safety of e-filing, if you're going to mail it, I recommend using certified mail, return receipt requested, for some peace of mind that, if necessary, (a) you can prove what date you mailed it, and (b) you can prove when it got there).
The upside to traditional paper returns is that you don't have to pay for a computer program and you don't have to pay more than postage (plus certified/receipt fees, if you take my advice) to file it.
The downside to traditional paper returns is that they CAN still get lost in the mail (a good reason to have the certified slip date-stamped by the post office to show when YOU mailed it), the IRS has to hand-code your return into their system which greatly multiplies the chances of data being entered incorrectly, and generally it will take several weeks to get your refund (if you're due one), mainly because it'll take awhile before they get your return processed.
Computer-generated return, sent in the mail
If your return is a bit more complicated but not enough to hire a CPA or tax preparer to handle it, you may decide to buy TurboTax or TaxCut or another program that will guide you through the process of preparing your review. I won't go into all those programs, but you can find reviews of most of them (including my review of TurboTax) in the Taxes section at http://www.epinions.com/finc-Taxes here on Epinions. Using the program, you can then choose to print out the necessary forms and send them with appropriate attachments to the IRS (insert same comment re: mailing certified, return receipt requested....<G>)
The upside to using a computer program is that you get some guidance on what to report and how to complete the return, the printed return looks all nice and neat and professional, the cost to mail it is still less than e-filing (unless you get a rebate, which is a whole 'nuther comment below), and you can print out a specially-coded page that allows the IRS to scan the necessary information into their system rather than hand-typing it.
The downside is essentially the same as above regarding the possibility of being lost in the mail, and the extra time to receive the refund due to mailing/processing times, even though the processing time is shorter with the scannable page. Oh, and of course you pay for the price of the program.
Computer-generated return, e-filed
This option, obviously, is my recommendation - even for a simple return. Yes, you may pay $30 or so for a program, but in future years you can generally get a partial rebate so that it doesn't cost so much. Rather than printing out the entire return and mailing it in, the information is specially-encoded and encrypted and transmitted first to an official "clearinghouse" such as Intuit (for TurboTax) and then transmitted from there directly to the IRS computers. The cost for e-filing is usually about $9.95, but a lot of the computer programs also include a rebate form for that cost (TurboTax does), so you essentially e-file for free!
The upside to e-filing is that it's transmitted nearly instantaneously to the clearinghouse and then to the IRS, nothing needs to be scanned or hand-typed into the IRS computers because the data is transmitted directly into them, and if you choose direct deposit of your refund, it's usually in your account within a couple of weeks.
The downside to e-filing is that you may still have to print out a couple of pages to send to the IRS with your W-2, etc. as follow-up, and you have to pay the e-filing cost or hassle with the rebate to make it free.
The twist to this option is that after you e-file for a year or two, you'll probably receive a special e-filing code from the IRS that eliminates the need to print and send in ANYTHING! Paperless returns, the wave of the future.
Online preparation, e-filed (added 3/9/00)
There are many sites that also allow you to input and prepare your tax return online - sometimes it's even free! Having not ever tried this option myself (whereas I have used all of the other options above), I can't say much about the process though it seems like it would be relatively painless. I must admit to some trepidation about storing that kind of personal information on someone else's server (if that is in fact how it works) and thus for me personally, I probably won't try it anytime soon (at least not for another year! <G>). There are numerous reviews in the Taxes section here at Epinions on some of these sites, however, and I encourage you to check them out for yourself if you're interested.
My experiences with e-filing
Maybe this should go up front, but I thought it best to lay out the options first. (This is getting ridiculously long for an editorial on "how safe is e-filing", isn't it!) I started using TurboTax for our tax return after we bought a house in 1994, but still didn't e-file the first couple of years. I finally used the e-file option for the first time for our 1996 return and it was SO easy. We did still have to send in some forms as follow-up, but that wasn't a big deal. Same thing for 1997. Then, before the end of 1998, we received a little postcard from the IRS giving us the special e-filing code that allowed us for the first time to e-file without having to send in anything as follow-up. It was great not having to mess with that and we got our refund deposited very quickly. We got the postcard again before the end of 1999 and I prepared our return and e-filed it on February 13 this year without having to do anything else - and our refund was in our account on February 25.
I haven't had any problems with e-filing, and I have no problems with transmitting the information electronically. The odds of something happening or the data being intercepted AND decoded are so remote, that it just doesn't bother me. If someone wants my personal data bad enough, there's a lot easier ways than hacking into my e-filing data.
(added 3/9/2000) One thing I neglected to mention because it seemed obvious (the worst thing to assume!) is that even if you e-file your return, you'll still want to print a complete copy of your return to keep with your records and related tax forms (W-2, etc.). Any comments above that sounded as if you did not have to print the whole thing or any part of it was merely in reference to not having to print it out to send to the IRS.
How safe is e-filing? Probably a lot safer than putting it in the mail where anyone could intercept it!
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slhansen
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Member: Steph ~
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