Bank finance articles and tips

In most situations, taking advantage of the convenience and speed of submitting your return online is a good idea. But there are some situations where this apparent convenience and utility isn't such a good thing.

When You Owe Money

If you've completed your return and ended up owing money to the government, you probably don't want to make use of IRS e-file, at least not right away. The theory is simple: why pay earlier than you need to, when you could hold on to those funds and make use of them at a later date? If you pay the government before the payment is actually due, you'll be missing out on the opportunity to put that money into your own projects, or on potential interest accrual for it over that time.

By holding on to it rather than submitting immediately, you are able to utilize it as you see fit for much longer. This becomes a significant advantage for you, as long as you make sure you don't forget to submit your forms at some point and can be certain that you have the funds when you do submit.

When Your Refund Is Very Small

In most cases, there is a fee attached to IRS e-file. It's usually something like $35 for state and Federal, although that number can change somewhat depending on where you go. If you're going to submit your forms electronically and you're only getting a very small refund, you could end up spending the entirety of what you would get back just to send it in.

Make sure that you get an estimation on your refund from whatever service you use to complete the forms. That way, you'll know whether it benefits you to file online or whether you'd be better off mailing in your return. Remember that you can submit your Federal and state forms separately, and that you may want to send one over the web and the other via mail.

When You Have To Send Multiple State Forms

If you have an overwhelming number of different states that all require you to submit tax documents to them, you may want to not do so electronically. It usually costs at least a small fee to do each submission, and if you're doing a lot of submissions, that can add up rather quickly.

What To Do Instead

Learning how to e-file is easy; remembering the details of how to properly mail in your forms is less so. The key is to have everything postmarked by the date required by the IRS. That is usually April 15th, but may be later depending on when the 15th falls. Check online or ask your prep company if you're uncertain.

Author writes about a variety of topics. If you would like more information about how to efile, visit Liberty Tax.

By Christine M Harrell