Why not paper-file taxes?

[pb4uski]

If one's income is solely from a job, withholding usually gets close to the proper amount of tax due. ...

Not really... if it did then there would be no need for those people to file a return and people would not be getting significant refunds with others bellyaching about significant amounts due.

Withholding being close to the proper amount of tax due is akin to a broken clock is correct twice a day.... pure coincidence and nothing more.

 

[scrabbler1]

If one's income is solely from a job, withholding usually gets close to the proper amount of tax due. Even in other situations many people figure an amount to pay as estimated taxes. I wonder what percent of taxpayers who are supposed to file a return do not. The person I mentioned is likely not the only one.

This is what I have found, mainly with state income tax returns where the impact of including the correct number of W-4 personal exemptions is strong because the withheld taxes are small.

I have been doing my ladyfriend's income taxes for 12 years. Once we got her W-4 (or state equivalent) personal exemptions straightened out in 2009, the amount of her refund of taxes due has been very small, never exceeding more than $45 refunded or $5 owed, always under 3% of her income tax liability. She is single with no dependents and takes the standard deduction which adds to the predictability. On the federal side, she intentionally underwithholds so she can take an interest-free loan of about $600 and use it to pay off some credit card debt. She has been taking the standard deduction since 2013 and had the W-4 exemptions been correct, she would have been well within $100 of her tax liability, or under 3%.

 

[RE2Boys]

I've had two incidents where I wished I did NOT file on paper.

1. Got a notice one year for penalties for not making appropriate estimated tax payments. Wrote back that it was all explained on Form 2210AL and I didn't owe the penalty. Month later, they said they have no record of the 2210AL. Turns out, they lost the paperwork before it got entered into the computer system.

2. Could not efile as my son's social security number had been used. Called and they said he claimed himself. I had filed his on paper, and knew he did not claim himself as I prepared the return and had a copy in front of me. Again, an error in transcribing into computer. Had to mail mine.

Lesson: much more likely for the IRS to error if file on paper and neither was in my favor. Both times it was an aggravation and cost me time I would have rather spent doing other things.

 

[GrayHare]

If you need to override a software calculation you can't efile, well, at least Turbotax disallows it. Seems I find an issue in the software that needs overriding about once every 2 years.

 

[LiveBelowMeans]

Use Turbo tax for calculations, however, only ever file paper copies. Much less likely to get audited and government has to work to get any data. With efile, your history is in the system forever. Easy to run algorithms on your data. Don't make it easy on them. Have never been audited (over 30 years) JMHO

 

[RE2Boys]

Use Turbo tax for calculations, however, only ever file paper copies. Much less likely to get audited and government has to work to get any data. With efile, your history is in the system forever. Easy to run algorithms on your data. Don't make it easy on them. Have never been audited (over 30 years) JMHO

Don't kid yourself, the first thing the govt does when receiving your paper (after removing the check of course) is to scan/enter data into computer. So it's in the system forever, as if you efiled.
Furthermore, you now have a paper copy floating around somewhere in an IRS building until it is properly(?) disposed of. Your just making an extra copy floating around by mailing it in.

 

[LiveBelowMeans]

I've heard they only scan the first 2 pages and store the rest.

 

[sengsational]

I've heard they only scan the first 2 pages and store the rest.

Over the years I've received a letter from the IRS complaining about something I did "wrong" on pages other than the first two pages, and no way to say it was wrong without examining deep into the additional forms. Thus, I can't say much about the timing, but I would wager to guess that at some point, they're getting a lot more than the first two pages entered.

That brings up an interesting point. It is possible to request from the IRS a transcript of your taxes. It seems like when I did that, there was a whole lot more information on there than the first two sheets. I kind of doubt they dig-up the old papers and enter the extra forms when a transcript request comes in.

 

[Gumby]

When I mail in a paper copy, I know precisely what I am telling the IRS, as it is there in black and white. If I e-file, who knows what information is contained in that data file sent directly from my computer to theirs? I have never been "creative" with my taxes, but I am still inclined to limit the information I give the government to the bare minimum required.

 

[RobbieB]

The IRS already knows your SS number, all your bank account numbers, broker numbers, money from pensions and SS and anyone else that sent you a 1099 or K1. Also your spouse and children's names and SS numbers and all their financial stuff too if you are claiming them on your return.

What other info are you worried about?

 

[Gumby]

The IRS already knows your SS number, all your bank account numbers, broker numbers, money from pensions and SS and anyone else that sent you a 1099 or K1. Also your spouse and children's names and SS numbers and all their financial stuff too if you are claiming them on your return.

What other info are you worried about?

Nothing in particular, but if I am certifying that something is true and correct, I want to know precisely what that something is.

 

[RobbieB]

I always print out the info for my records and look at all the forms before I efile. Then I know what I certified to be correct and complete and also get some education about how taxes work.

You are thinking that somehow the efile has different info than the printout?

 

[Gumby]

You are thinking that somehow the efile has different info than the printout?

Either different or additional. The point is that I simply don't know what is in the electronic file that my tax software spits out. I don't presume that it is precisely and only what shows up on the paper when I print it. Apparently, you make the assumption that it is. To each his own.

 

[sengsational]

The format sent to the IRS is "MEF" and is human readable XML. The problem is that tax software makes it difficult to get data out of their environment (no "file > export" functionality). That's supposed to lock you into their software "forever". But competition has forced them to add import functionality to reach each others' formats.