I am not advocating for either method of filing your taxes but everyone who files their own taxes should be aware of the information contained in the above referenced article.
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Although I’m concerned that the next Bernie Madoff will use AI to steal everything from bank accounts to real estate titles, I use 100% software and online tax returns, filing and payments. As a society, we must continue to stive for better protection of our assets. And on the other hand, I don’t use any social media, except for responding to these wonderful HD articles. My interesting experience is using CPAs. In the 90’s I was a limited partner in an LLC so I used a CPA firm to handle my tax returns (on paper, that I signed and mailed). But almost every year I got that dreaded letter from the IRS describing an error in my return and stating that I owed hundreds more dollars, including penalties. Each year, the CPA sent me a booklet and requested that I fill it out and gather the tons of documents and receipts needed for them to prepare my returns. Long-story-short, I started using TurboTax about 15 years ago with e-file and e-payment, and I spend less time than it took to gather the documents, and I’ve never received another letter from the IRS (knock on wood!).
“As a society, we must continue to strive for better protection of our assets”.
I’ve long said that until the Federal courts start doling out significant jail time to corporate executives for data breaches rather than fines nothing will change. When companies are fined the executives don’t pay the price, it’s the investors. The executives get off scott free.
Patrick, I’m glad you discovered a more satisfying method of preparing and filling your tax returns. My own interest in self preparation began when I noticed errors our tax preparer made.
Someone once said, nobody is going to care about your money the way you do.
A couple years ago, I was obligated to file my federal taxes on paper. Because my company had its pension plan turned over to the PBGC, I was eligible for the Health Coverage Tax Credit (partially refunded health insurance premiums between separation and Medicare) for one year. Unfortunately, the HCTC wasn’t renewed in successive years so I got to pay in full myself in subsequent years. But that one year the form for HCTC credit was only on paper. It also required documentation of each and every premium payment and proof that the health insurance plan was eligible for the HCTC (more pages).
Also, we had an optional part of the pension program which I paid into with after-tax dollars. So, a portion of my PBGC payment is free from tax, but requires a (paper only) worksheet. A small part of my (greatly reduced) pension is tax-free until 2050. Therefore, money I started contributing in 1984 will have earned 0% interest, but be tax-free.
My paper federal taxes were nearly an inch thick that year.
I think filing by paper is so quaint. More quaint than listening to an album on a turntable. Also quaint is attaching a check for what you owe. At least with an LP you can keep track of it but a paper return and an actual check ….
Nick, There is no obligation to send a check with a paper return. I use the IRS electronic federal tax paying system—EFTPS. for any taxes owed and for submitting estimated tax payments. They directly debit your account and give you a confirmation number.
As for being quaint, I don’t mind it. I love old songs, old movies and old fashioned courtesy.
I agree with you and I don’t mind being quaint either as I also love old songs, movies and tv shows. I think I came across as sarcastic but that wasn’t my intention.
I expect Musk to monetize the data. He can use it to refine and train AI systems. He can use it for tailored propaganda. He can sell it to advertisers. I trust a random IRS agent a whole lot more than I do Musk and his juvenile tech bros. And my understanding is that IRS and Social Security data is much more closely held than “10s of thousands”. That is why actual government employees have been resigning when “DOGE” people demand access. BTW, Musk et al are not “government employees”. Or elected or appointed officials.
Since the invention of the internet, smart phones and other technology, anything about us is vulnerable to being compromised. I can’t even trust the postal service when they deliver my tax documents to a wrong address.
Mike, there are risk associated with everything we put either in the mailbox, or on the internet. And there are safeguards we can implement to reduce those risks, as suggested by Andrew Forsythe.
In 2023, lawmakers found that H&R Block, Tax Act and Tax Slayer “recklessly shared” potentially hundreds of millions of taxpayers sensitive personal and financial data with Google and Meta for years.
David, from what I’ve been able to understand there is still a congressional probe going on, led by senator Elizabeth Warren and if the federal government decides to sue the tax prep companies under scrutiny could be liable for billions of dollars.
Good luck to all of you who file paper. With the staff cutbacks at the IRS, you may be up the proverbial creek without a paddle.
For some paper is the only way to file. For most with simple returns, there is no need for paper. Because our financial affairs are not complex, self-prep via TurboTax or some other tax prep software is easy and e-filing quick. It took me about 2 hours to do my return after I received our last 1099. Within 30 minutes of filing, my return was accepted.
As I read the article, my impression was that the author was choosing incidents that magnified the impact of making a mistake when you need to e-file, and how much tax preparers can hurt you.
All financial decisions a person makes have future impact. If you choose financial strategies that create tax complexity, you must be prepared to deal with the inevitable consequences. Whether it is a consulting business side-hustle, rental real estate, crypto, day trading, oil depletion allowances, private equity or many other opportunities, please think about how you will deal with the effect on your income tax preparation.
B Carr..not an opinion piece. The author is a highly regarded, successful and experienced CPA. His article was fact based, and is believable enough so that the WSJ continues to run his articles. Now, you may prefer to manage your taxes differently. That is your choice.
we all make decisions based on the information available to us. I like to have a lot of information, including, when it comes from the “road less traveled.”
“..not an opinion piece.” It’s labeled “Opinion” at the top of the page. The piece is more than four years old and was almost universally panned by readers, many of whom identified themselves as CPAs. Several said it was the worst thing they’d ever read in the WSJ.
Luckless, you are right as far as the heading at top of page. I stand corrected there. But, however we choose to file our taxes, it pays to be aware. The overwhelming majority of opinion we read, is that e-filing is the more efficient way to go, but the authors insights were very interesting, especially given his expertise. It pays to keep an open mind even if you disagree.
In the old, old days I photocopied forms at the library, filled them in by hand, usually finishing in late March, mailed them, and waited anxiously to learn the result.
In the old days I downloaded PDFs of the forms from the IRS and state sites, filled them in electronically if they were fillable, otherwise by hand, and mailed them, still usually in March. More anxious waiting.
I started using TurboTax and e-filing a couple years before I knew I’d be selling the house. Got through that mess relatively unscathed. Since retiring, my finances are simpler. With TurboTax I can now finish in early February. Receiving, within just an hour or two of e-filing, the emails that the various returns have been accepted is so reassuring.
I’ve been using TurboTax so long that when I first started you could use the program to calculate your taxes, but you still had to print it out and mail to the IRS.
IRS was behind the times when it came to technology back then. What’s the saying? Oh yeah, the more things change the more they stay the same. I read they still use a system based on COBOL language which was released in 1960.
Okay, I was able to listen to the video link of the article. The reporter goes into detail about an e-filed tax return that was rejected by the IRS. Once e-filed, the preparer (and possibly the taxpayer as well) will receive notice of acceptance or rejection in a matter of minutes. A rejected return contains the reason for the reject. In this case the preparer was remiss in his duty to fix the error and communicate with his client. Sadly, the IRS puts the onus on the taxpayer, thus the penalty and interest. A paper return may sidestep the electronic return originator, but your data still ends up in the same electronic home. I still maintain that it’s far more likely that a mailed return will be lost or stolen.
Olin, thank you. very kind of you. The article also addresses ID.me and other pertinent information. I would have tried to consolidate some of the information and write an article myself, mentioning my source. However, after reading it a few times I felt the author said everything just the way it should be said. Again, thank you. As I recall you also shared links for others posts with paywalls.
Thanks for the reminder about cyber risks, Marjorie.
Though I feel like the last of the dinosaurs when I file paper returns, I will continue to file by mail for as long as the IRS permits. If processing is slower via paper, so be it; any refund is applied anyway to current year estimated tax. Paper filing has risks, of course, which can be minimized by using certified mail and USPS tracking, and with electronic funds transfer to the IRS for payments owed. As for e-filing, I worry that third-party sites could inadvertently or otherwise digitally capture and store personal data and that the sites themselves have vulnerabilities. If and when IRS.gov will directly accept complex returns, I will gladly e-file.
Jo Bo, you’re not the only dinosaur, as I’ve continued to manually prepare my taxes on paper and mail them in for decades. I do make payments via my online account at the IRS website.
I’ve tried using tax prep software in the past but there’s always been some oddball form or supplemental information I’ve needed to include and there was no way for the software to accomodate that. Marjorie’s post today about FreeTaxUSA got my attention, though, so I might give it a try and see if maybe it would work for me.
When I mail my return, I do use USPS tracking but not certified mail. A funny story about that: Years ago I had to exchange some important correspondence with the IRS so I sent it certified mail. When a long time passed with no indication they’d signed for the certified mail, I called. After the usual long (long!) wait time, I spoke to a nice IRS rep. I explained I’d gone the extra mile and sent my correspondence via certified mail. She laughed and said, “Oh no, don’t ever send us anything by certified mail. That means somebody has to go down to the mail room to sign for it, and it’ll just sit there forever before anybody does that!”
Great anecdote, Andrew. I’ll still rely on certified mail, though. I learn when and where the mail is delivered and can print and save the information. Along with a copy of the original return, that should help prove that I filed. I’m not concerned about IRS processing times.
Thank you JoBo. I had the same situation. For many years I had to file using paper return because of one peculiarity in our tax situation. So I got used to it as well, but often wondered which was the better way. A contrarian by nature, I never gave up seeking an answer. As I previously said, I’m not advocating for one way or another. I just like to be informed of the pros and cons and, as Mr. Starkman stated, not even many tax professionals are aware of the various problems.
Hi Marjorie, just my two cents worth but your return will be processed quicker if you e-file. I was unable to access this article from last year. Nothing is without risk but I’d be more afraid to put a tax document with my social security number on it in the mail than to file it electronically. I don’t even send checks by regular mail anymore. Check washing is a big thing these days.
The general consensus of opinion is that you get a refund faster with e-filing; however, as JoBo indicated any refunds can also be applied to next year’s taxes. We all have to take our different situations into account. About your concerns regarding your social security number, when you e-file you are exposing your information to the internet which is just as concerning to me.
Although I’m concerned that the next Bernie Madoff will use AI to steal everything from bank accounts to real estate titles, I use 100% software and online tax returns, filing and payments. As a society, we must continue to stive for better protection of our assets.
And on the other hand, I don’t use any social media, except for responding to these wonderful HD articles.
My interesting experience is using CPAs. In the 90’s I was a limited partner in an LLC so I used a CPA firm to handle my tax returns (on paper, that I signed and mailed). But almost every year I got that dreaded letter from the IRS describing an error in my return and stating that I owed hundreds more dollars, including penalties.
Each year, the CPA sent me a booklet and requested that I fill it out and gather the tons of documents and receipts needed for them to prepare my returns. Long-story-short, I started using TurboTax about 15 years ago with e-file and e-payment, and I spend less time than it took to gather the documents, and I’ve never received another letter from the IRS (knock on wood!).
“As a society, we must continue to strive for better protection of our assets”.
I’ve long said that until the Federal courts start doling out significant jail time to corporate executives for data breaches rather than fines nothing will change. When companies are fined the executives don’t pay the price, it’s the investors. The executives get off scott free.
Patrick, I’m glad you discovered a more satisfying method of preparing and filling your tax returns. My own interest in self preparation began when I noticed errors our tax preparer made.
Someone once said, nobody is going to care about your money the way you do.
Thanks for your comments.
A couple years ago, I was obligated to file my federal taxes on paper. Because my company had its pension plan turned over to the PBGC, I was eligible for the Health Coverage Tax Credit (partially refunded health insurance premiums between separation and Medicare) for one year. Unfortunately, the HCTC wasn’t renewed in successive years so I got to pay in full myself in subsequent years. But that one year the form for HCTC credit was only on paper. It also required documentation of each and every premium payment and proof that the health insurance plan was eligible for the HCTC (more pages).
Also, we had an optional part of the pension program which I paid into with after-tax dollars. So, a portion of my PBGC payment is free from tax, but requires a (paper only) worksheet. A small part of my (greatly reduced) pension is tax-free until 2050. Therefore, money I started contributing in 1984 will have earned 0% interest, but be tax-free.
My paper federal taxes were nearly an inch thick that year.
I believe you, Hugh. I have heard of returns that have 90 pages as attachments. It is a shame that things can’t be made easier for honest taxpayers.
I think filing by paper is so quaint. More quaint than listening to an album on a turntable. Also quaint is attaching a check for what you owe. At least with an LP you can keep track of it but a paper return and an actual check ….
Nick, There is no obligation to send a check with a paper return. I use the IRS electronic federal tax paying system—EFTPS. for any taxes owed and for submitting estimated tax payments. They directly debit your account and give you a confirmation number.
As for being quaint, I don’t mind it. I love old songs, old movies and old fashioned courtesy.
I agree with you and I don’t mind being quaint either as I also love old songs, movies and tv shows. I think I came across as sarcastic but that wasn’t my intention.
Given Musk and his minions now have access to the IRS computers, your data is compromised however you file. Just think how valuable it all is.
Mytime—what’s the difference in threat of exposure between Musk and the other 10s of thousands of government employees that have access to our info?
I expect Musk to monetize the data. He can use it to refine and train AI systems. He can use it for tailored propaganda. He can sell it to advertisers. I trust a random IRS agent a whole lot more than I do Musk and his juvenile tech bros. And my understanding is that IRS and Social Security data is much more closely held than “10s of thousands”. That is why actual government employees have been resigning when “DOGE” people demand access. BTW, Musk et al are not “government employees”. Or elected or appointed officials.
Since the invention of the internet, smart phones and other technology, anything about us is vulnerable to being compromised. I can’t even trust the postal service when they deliver my tax documents to a wrong address.
Interesting that the article never mentions the risk of mailing a paper return — having it stolen out of the mail, along with your identity.
Mike, there are risk associated with everything we put either in the mailbox, or on the internet.
And there are safeguards we can implement to reduce those risks, as suggested by Andrew Forsythe.
In 2023, lawmakers found that H&R Block, Tax Act and Tax Slayer “recklessly shared” potentially hundreds of millions of taxpayers sensitive personal and financial data with Google and Meta for years.
What was their punishment?
David, from what I’ve been able to understand there is still a congressional
probe going on, led by senator Elizabeth Warren and if the federal government decides to sue the tax prep companies under scrutiny could be liable for billions of dollars.
Good luck to all of you who file paper. With the staff cutbacks at the IRS, you may be up the proverbial creek without a paddle.
For some paper is the only way to file. For most with simple returns, there is no need for paper. Because our financial affairs are not complex, self-prep via TurboTax or some other tax prep software is easy and e-filing quick. It took me about 2 hours to do my return after I received our last 1099. Within 30 minutes of filing, my return was accepted.
As I read the article, my impression was that the author was choosing incidents that magnified the impact of making a mistake when you need to e-file, and how much tax preparers can hurt you.
All financial decisions a person makes have future impact. If you choose financial strategies that create tax complexity, you must be prepared to deal with the inevitable consequences. Whether it is a consulting business side-hustle, rental real estate, crypto, day trading, oil depletion allowances, private equity or many other opportunities, please think about how you will deal with the effect on your income tax preparation.
I’m loathe to cull much decision making value from an opinion piece.
B Carr..not an opinion piece. The author is a highly regarded, successful and experienced CPA. His article was fact based, and is believable enough so that the WSJ continues to run his articles. Now, you may prefer to manage your taxes differently. That is your choice.
we all make decisions based on the information available to us. I like to have a lot of information, including, when it comes from the “road less traveled.”
“..not an opinion piece.” It’s labeled “Opinion” at the top of the page. The piece is more than four years old and was almost universally panned by readers, many of whom identified themselves as CPAs. Several said it was the worst thing they’d ever read in the WSJ.
Luckless, you are right as far as the heading at top of page. I stand corrected there. But, however we choose to file our taxes, it pays to be aware.
The overwhelming majority of opinion we read, is that e-filing is the more efficient way to go, but the authors insights were very interesting, especially given his expertise. It pays to keep an open mind even if you disagree.
Please notethe article was published in February 2024, not 4 years ago.
In the old, old days I photocopied forms at the library, filled them in by hand, usually finishing in late March, mailed them, and waited anxiously to learn the result.
In the old days I downloaded PDFs of the forms from the IRS and state sites, filled them in electronically if they were fillable, otherwise by hand, and mailed them, still usually in March. More anxious waiting.
I started using TurboTax and e-filing a couple years before I knew I’d be selling the house. Got through that mess relatively unscathed. Since retiring, my finances are simpler. With TurboTax I can now finish in early February. Receiving, within just an hour or two of e-filing, the emails that the various returns have been accepted is so reassuring.
I’ve been using TurboTax so long that when I first started you could use the program to calculate your taxes, but you still had to print it out and mail to the IRS.
IRS was behind the times when it came to technology back then. What’s the saying? Oh yeah, the more things change the more they stay the same. I read they still use a system based on COBOL language which was released in 1960.
Ah, yes, COBOL. We used to say that it stood for “Compiles Only Because Of Luck.”
Thanks 1PF!
Stolen.
As an old, retired, IT guy that’s one I never saw before.
Okay, I was able to listen to the video link of the article. The reporter goes into detail about an e-filed tax return that was rejected by the IRS. Once e-filed, the preparer (and possibly the taxpayer as well) will receive notice of acceptance or rejection in a matter of minutes. A rejected return contains the reason for the reject. In this case the preparer was remiss in his duty to fix the error and communicate with his client. Sadly, the IRS puts the onus on the taxpayer, thus the penalty and interest.
A paper return may sidestep the electronic return originator, but your data still ends up in the same electronic home. I still maintain that it’s far more likely that a mailed return will be lost or stolen.
Dan, glad you finally got through. Olin also provided a good link as indicated below.
The article is from 2024 and has been archived. Use this link if you don’t have a WSJ subscription. https://archive.ph/ukatP
Olin, thank you. very kind of you. The article also addresses ID.me and other pertinent information. I would have tried to consolidate some of the information and write an article myself, mentioning my source. However, after reading it a few times I felt the author said everything just the way it should be said. Again, thank you. As I recall you also shared links for others posts with paywalls.
You’re welcome! Glad to help.
Thanks for the reminder about cyber risks, Marjorie.
Though I feel like the last of the dinosaurs when I file paper returns, I will continue to file by mail for as long as the IRS permits. If processing is slower via paper, so be it; any refund is applied anyway to current year estimated tax. Paper filing has risks, of course, which can be minimized by using certified mail and USPS tracking, and with electronic funds transfer to the IRS for payments owed. As for e-filing, I worry that third-party sites could inadvertently or otherwise digitally capture and store personal data and that the sites themselves have vulnerabilities. If and when IRS.gov will directly accept complex returns, I will gladly e-file.
Jo Bo, you’re not the only dinosaur, as I’ve continued to manually prepare my taxes on paper and mail them in for decades. I do make payments via my online account at the IRS website.
I’ve tried using tax prep software in the past but there’s always been some oddball form or supplemental information I’ve needed to include and there was no way for the software to accomodate that. Marjorie’s post today about FreeTaxUSA got my attention, though, so I might give it a try and see if maybe it would work for me.
When I mail my return, I do use USPS tracking but not certified mail. A funny story about that: Years ago I had to exchange some important correspondence with the IRS so I sent it certified mail. When a long time passed with no indication they’d signed for the certified mail, I called. After the usual long (long!) wait time, I spoke to a nice IRS rep. I explained I’d gone the extra mile and sent my correspondence via certified mail. She laughed and said, “Oh no, don’t ever send us anything by certified mail. That means somebody has to go down to the mail room to sign for it, and it’ll just sit there forever before anybody does that!”
Great anecdote, Andrew. I’ll still rely on certified mail, though. I learn when and where the mail is delivered and can print and save the information. Along with a copy of the original return, that should help prove that I filed. I’m not concerned about IRS processing times.
Thank you JoBo. I had the same situation. For many years I had to file using paper return because of one peculiarity in our tax situation. So I got used to it as well, but often wondered which was the better way. A contrarian by nature, I never gave up seeking an answer. As I previously said, I’m not advocating for one way or another. I just like to be informed of the pros and cons and, as Mr. Starkman stated, not even many tax professionals are aware of the various problems.
Jonathan has come to the rescue, with a hyperlink, so all should be able to access.
thanks, Jonathan.
Hi Marjorie, just my two cents worth but your return will be processed quicker if you e-file. I was unable to access this article from last year. Nothing is without risk but I’d be more afraid to put a tax document with my social security number on it in the mail than to file it electronically. I don’t even send checks by regular mail anymore. Check washing is a big thing these days.
The general consensus of opinion is that you get a refund faster with e-filing; however, as JoBo indicated any refunds can also be applied to next year’s taxes. We all have to take our different situations into account. About your concerns regarding your social security number, when you e-file you are exposing your information to the internet which is just as concerning to me.
I agree that we all have to do what we feel comfortable with.
Darned paywall. I’ll try stopping at the library in order to read this one.
Thanks Marjorie.
Dan, if you click on open link it will also open that way. I used an apple iPad bu my desktop has the same options.
Please let me know if you’re successful.
Dan, if you tap it, press “look up” option. It should come up. Wouldn’t work by just tapping.