Why You Should E-File Your Taxes

Avoiding the hassle of paper returns will save you more than time and money.

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Last year, TurboTax produced an infographic on filing your taxes that really drove home the importance of filing your taxes online. The most amazing statistic was that 46 million returns in 2008 were still filed on paper. Forty six million. When e-filing is so cheap, sometimes even free, it's amazing that so many people introduce more hassle into their lives by filling out a paper return, driving to the post office, and paying for registered mail to get the tome in on time.

While I'm sure the number has decreased since then, it's still in the double digit millions. If you're one of those people, consider e-filing your tax return this year. Here are just a handful of reasons why it is better than filing on paper.

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Easier to Prepare

Let's be honest, do you really want to tackle all the IRS forms without the help of a real live human being or software? Probably not. Tax preparation packages can walk you through almost every situation and I'd imagine a good percentage of Americans won't have any problems using it. If you've been hesitant to use it because you aren't sure a "box" can help you, why not give it a try and see if you will run into any problems?

Software packages today are much savvier than they were years ago. They know the audit red flags so they'll review your return and specifically ask you about something that looks suspicious. Maybe you entered in a number incorrectly? Maybe you forgot to fill out something? They can check that for you.

More Secure

Your tax return has all the information an identity thief needs to ruin your financial life. It has all of your personal information, your employment information, and, based on deductions, a lot of your activity as well. If you opted for direct deposit of your refund, which is the best and fastest option, a potential thief also has your banking information.

While the likelihood you would lose your return is small, especially if you mail it in with registered mail, it's not zero. E-filing is encrypted and secure. There's no chance you'll get a piece of mail wrapped in a small plastic bag with a letter of apology.

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Faster Processing

The biggest reason you should e-file is because you'll get your tax return processed faster and your tax refund, if you're due one, is sent to you much faster. Last year, the average tax refund was over three thousand dollars. It's your money, it should be in your pocket as quickly as possible!

When you mail in your return, the data needs to be processed and entered into the system. Whether it's by OCR or by hand, it's not instantaneous and so there will be a few days between when they receive the return and when they start processing it. It's also not foolproof and errors do happen. The last thing you want to deal with is an audit because someone keyed in the wrong data or misread your numbers!

It May Be Free

You can use IRS's freefile program and file your taxes for free if your income is under $58,000. They've partnered with 20 different tax preparers to give you free federal tax return processing and free e-filing.

When this option is free and faster, there's very little reason why you should do it by hand! So, if you're one of the many millions of Americans who file on paper, consider jumping over to the good guys and e-filing.

Jim Wang writes about personal finance at Bargaineering.com. When he's not tackling money issues, he's usually looking forward to his next vacation and writing about it at Wanderlust Journey.