The option of filing taxes online may be more convenient for some but there are disadvantages to electronic filing that you may not know about. It is important to understand these disadvantages before hastily making the decision to file your taxes online.
Secure Information
No matter how reputable the online tax service you choose may be, there is always a certain element of risk to releasing secure information electronically. Prior to filling in a single tax-related web form, do careful research on the electronic filing service you’re working with. If something seems suspicious or you find several reports of identity theft with a certain website, move on to a different tax filing solution.
Cost
Tax forms are free but having someone else prepare them for you never is. Despite needing to enter your tax return information manually, the convenience of electronic filing comes with a price tag. The price of online tax preparation varies by provider and the more complicated your taxes are, the higher the fee will be. Carefully read all filing fees charged by your chosen electronic tax filing service.
Advertisements
Throughout the entire preparation and filing process, electronic tax services often barrage their customers with advertisements for upgrades and other products they sell. Many electronic tax filing services present pages of advertisements between preparation steps. While this does not detract from electronic filing capabilities, it can get tiresome. Impulsive shoppers may find themselves spending more than they planned on for their electronic tax filing.
Reliance on Technology
Imagine being four hours into a complicated income tax return and losing all of your work because your internet connection briefly stopped working. When you are reliant on technology to electronically submit your taxes, you are at risk for encountering this kind of frustrating scenario. The only precaution you can take to avoid this disadvantage of electronic filing is to periodically save your work. If you’re not careful you may find yourself filling in all those tax forms more than once.
Filing State Returns
Not every state allows for electronic tax filing and not every online tax service does state returns. This disadvantage of opting for electronic tax preparation is most applicable to taxpayers with a large state tax obligation. If you need help with your state returns, you may wind up paying two separate companies.
While filing taxes online can be a convenience at times, it is good to know the different disadvantages to e-filing as well. The cost, security and ability of electronic filing to meet your tax needs should be considered carefully prior to committing to an online tax service.