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How you file taxes can impact everything from how fast you receive a refund to how likely you are to make a potentially expensive mistake.
Yet 1 in 5 taxpayers are still opting for a risky route — filing their taxes on paper.
A John Hancock Personal Financial Services survey of Americans age 18 and older conducted earlier this month found that while most folks file their taxes electronically, 20 percent still fill out paper tax returns.
Mailing a paper tax return to Uncle Sam can cost you in multiple ways, including the following:
1. Your tax refund will probably take longer
According to the Internal Revenue Service, folks who file electronically usually receive their refunds within three weeks of when the IRS gets the return. And you stand to get your refund even sooner if you choose to receive it by direct deposit into a bank account.
For folks who file on paper, however, the IRS says it can take six to eight weeks to process the returns.
2. You have fewer options
When you file on paper, you fill out a paper tax return manually and mail it off to the IRS. That’s really about your only option.
If you choose to file electronically, however, the IRS gives you four options from which to choose. You can use:
- IRS Free File or IRS Fillable Forms. These are options for folks who have a taxable income of $66,000 or less, or who are comfortable doing their own taxes, respectively.
- A free tax-return-preparation site. This is an option for folks who qualify for the IRS Volunteer Income Tax Assistance or the Tax Counseling for the Elderly programs.
- Commercial tax-preparation software. This refers to software programs like TurboTax and others detailed in “Here’s the Best Tax Software for 2018.”
- An authorized e-file provider. This refers to tax professionals who are approved by the IRS to handle e-filed returns.
3. You’re more likely to make a mistake
According to the IRS, the error rate for paper tax returns is 21 percent — compared with just 0.5 percent for electronically filed returns.
How do you prefer to submit your income taxes? Let us know below or on Facebook.
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