6 Reasons why mobile tax filing is growing in popularity
Would you be willing to file your taxes using a mobile device? The popularity of smartphone tax filing is on the rise, and we know why.
Cricket Wireless just released the results of a study by Sentient Decision Science in January 2014 that showed that mobile tax filing is on the rise.
According to the study, 45 percent of Americans feel comfortable filing their taxes on a smartphone. The highest percentage of those willing are 18 to 29-year-olds at 56 percent, though older generations (45 to 64-year-olds) are also catching the mobile wave, with 34 percent of them saying they think mobile filing is acceptable.
Why is mobile filing trending up?
With the increasing sophistication of phone apps, it was only a matter of time. Cricket's study compares their mobile-filing findings with people's comfort using a mobile wallet and storing sensitive account information. About half of all people feel comfortable with both, so mobile filing is only slightly behind that.
We stopped by the U.S. Tax Center for some more info on the pros and cons to see if we could figure out why this trend is growing.
E-filed returns are processed quickly — in about one or two days. Of course, this is only a benefit if the IRS owes you money. But if you regularly e-file, especially with the same mobile app, the app can save previous tax returns and reference those for the info you need later.
Also, when you e-file, you get an immediate confirmation that your return was received, and any filing errors will be noticed and noted within about a day. If you file a paper return, it will be weeks before you can rest assured the IRS received it — and, therefore, weeks before you find out there was a problem with your filing.
The IRS estimates that only half a percent of electronic filings come in with errors. Compare that to the rates of 10 to 21 percent for paper returns. There's also the fact that e-filed returns are easier to correct if you do make a mistake.
Reliable record keeping
Electronic records can be stored online, meaning a natural disaster or fire won't destroy all your records. Many apps even allow you to store them wherever you want, like on your personal Dropbox.
Cheap and Convenient
Many mobile tax-filing apps allow you to file your simple federal tax returns free (at least during certain months) and may allow you to file state returns free or at a low rate. And since you don't have to leave the house, there's no dealing with the line at the post office (or spending money on gas or stamps) to get your return in on time.
E-filing helps save trees. 'Nuff said.
Mobile filing apps usually have a simple list of questions to help you get started and may offer you access to an easy-to-use answers' database — they may even give you access to a real tax professional at no or low additional cost if you have questions. The paper forms are full of confusing lines that guide you to fine-print instructions on the bottom or another page.
Drawbacks to mobile filing
Before you go download your favorite mobile tax apps, make sure you know what you're getting into. There are also some drawbacks.
For some, this may be a bonus, but if you owe money, filing on paper may give you more time to raise the funds to pay.
Not all apps are created equal
If you plan to file through a mobile app, make sure you read the reviews to see what other people are saying. Be on the lookout for people who might have situations similar to yours and what problems they had.
Some filings must be on paper
If you have a situation that's complicated in some way, the IRS may require you to file on paper. If you live overseas, the only way to e-file is through a firm, so no mobile filing for you.
Electronic records are easier to save and store, especially with all the apps available on a mobile device, but there are some security concerns. The apps themselves may be secure, but the servers where your information is stored can still be hacked, so make sure you're confident in the security of the apps you use while filing your returns. Additionally, your phone can be stolen, hacked or cloned. Hopefully, if it is, you don't have your passwords saved in a note file or in your e-mail.