E-Filing Can Be Dangerous. Here's Why.

We're all aware that the IRS is pushing everyone to e-file. It's quicker and simpler for everyone involved. We know the positives. What are the minuses. Once again, I summarize content from IRSMind.

1. By e-filing you're essentially giving the IRS more time to look over your return and potentially audit you. E-filing posts in 1o days. Paper returns post in 6-8 weeks. Basically, by e-filing you're giving the IRS an extra 2 months to audit you.

2. E-filing gives the IRS a much clearer picture of your tax return. This is because an e-file is fully inputed while a paper file only has key criteria entered into your master file. Why is more info bad? Because if something ever goes wrong, the IRS will have more info to argue against you with.

3. A paper return has documentation attached to act as proof, such as reasons why your charitable deductions are deductible and the amount is accurate. In e-filing, documentation is not always attached or may not make it to your file. In true government fashion, the IRS will usually choose the low hanging fruit, the easiest targets, the ones with the highest probability of not proving their case when choosing who to investigate. Do you want to be that person?

4. The IRS has significantly sped up the time it takes to receive a refund. In fact, if they are significantly late is paying a refund, they must pay interest on it. The difference between paper and e-file is usually 2-3 weeks. So, the argument that e-filing is a worth the risk since you get your money sooner is flawed.

5. (Point added by yours truly) Giving the IRS direct access to your banking info by e-filing and getting Direct Deposits only gives the IRS an easy source to levy if you get into trouble. If you change your bank account frequently, this shouldn't be an issue, but how often do you really do that?

So, why should I e-file? The only real reason is to lessen the government's expenses during the filing season. Other than that, I'd stay away from it. See my earlier post for filing alternatives.