Tax Preparation Tips; Why You May Want to Change Your Refund Method

The Reason the IRS Encourages e-Filing.

The chances of a tax return being 100% correct is increased greatly when accepted by the IRS e-filing system. It cuts down on errors and the work involved with documenting a tax payers tax information.

It is much much easier for the IRS to keep track of tax returns electronically.  The massive amount of paper generated when over 133 million individual tax returns show up over the course of the year can be overwhelming.

And believe it or not, keeping up with tax payers, using the computer makes it easier for everyone.  Different IRS employees can access different tax payers records, when permitted by the system, and can note the account so the next IRS employee will know exactly what is happening with the account.

Tax Preparation, Do You Have to e-File?

No.  However tax preparation professionals are required to attach a Form 8948, Preparer Explanation for Not Filing electronically, to the tax payers tax return.  Tax Preparation professionals are not required, yet, to send this information to the IRS.

Potential Problems With Refunds Placed in Bank Accounts

Tax payers who have received a refund for years have no problem providing the IRS with their bank account numbers in order to have refunds placed into their accounts.  And this is safe and fast way to get a refund.

However, what happens when one year, you get a "big"increase in income, and you end up owing the IRS a lot more than you expected?

No, the IRS, usually won't levy your bank account without going through the proper procedure, but the truth is, they already have your bank account information.  Now, this is NOT a serious problem, because, when they really want to know where a taxpayer banks, they can find out.

The fact is, there is added stress for the tax payer, because the IRS knows more about your private banking habits then you would like for them to know, after your annual income has doubled and for some tax payers, tripled!  (Everything changes when you become one of the high earners)

This is not a serious issue, however, for taxpayers who are planning on moving up the corporate ladder, it's something to think about.

Tax preperation tips has been brought to you by Taxes Will Travel - Online Tax Service for unfiled and current year taxes.