Unfortunately, unless you’re also extremely organized, a few of these files have likely disappeared into thin air, and you dread having to scour through hundreds or thousands of documents just to find what you need.
If you’re overloaded with paper and worn down from keeping track of tax records by hand, you’re due for an upgrade to tax software. It’ll cure your tax season headaches and make your life easier—here’s how.
1. It Can Keep Track of Everything
Using tax software means you won’t have to comb through physical paper files anymore. Nearly all brands of tax software feature digital file storage, automatic record categorization, and file search functions as basic capabilities—meaning you can easily find what you need in one place. You’ll no longer have to deal with missing documents, lost papers, or other inconveniences that come with physical storage.
Additionally, you won’t have to spend hours keeping track of everything—tax software will automatically store your files in a repository that you can access at any time. Many programs come with built-in file search functions, meaning you can find exactly what you need by simply typing in the name or type of file you’re looking for—no more rummaging through physical folders to find what you need.
2. It’s Easy to Switch
If you’re worried about the hassle of having to digitize prior years’ tax filings, fear not. Many platforms offer easy uploading solutions. Depending on the software you use, uploading your paper documents (for example, last year’s W-2) could be as simple as snapping a photo of it on your smartphone. The information captured in the picture would then be automatically read by your device and transferred onto a digital copy. If you ever need to access that W-2 again, you can simply pull it up by opening your tax software.
Put another way, you are unlikely to have to make manual adjustments or entries. You won’t need to transcribe things by hand, or in many cases, even have to scan your records page-by-page using your printer. Tax software is built with all kinds of taxpayers in mind—including those who are considering the switch from paper to electronic.
3. It’s Secure
Though keeping physical documents on hand is certainly safe, digitizing them via tax software is no less secure. Tax preparation companies know that you’re sharing sensitive information over the web, like your social security number and sources of income, so they work hard to keep your data safe and private.
If your tax software is cloud-based (i.e. the software is available online and you access it via your browser), the connection to the site should always be secured by the Transportation Layer Security (TLS) cryptographic protocol. This ensures that any data you send to and from the site—like your account information or any income information you provide—stays encrypted and private to 3rd parties.
If you’re especially concerned about security, you can see if your tax software vendor offers a desktop version of their software. Rather than access the program via the Internet, you can download this software directly onto your computer’s local hard drive. When you use the application to fill in your tax information, the resulting data stays on your desktop—and isn’t transmitted anywhere else. Only when it comes time to file your taxes with the IRS will you need to send your sensitive information anywhere else—and of course, this process is highly secured as well.
4. It’s Error-Free
Last year, over 9 million taxpayers made math errors on their tax returns. For some, making the necessary corrections can be frustrating and time-consuming. For example, you may have to file an amended reform, pay extra taxes, or even be subject to fines or penalties.
If you do your taxes by hand and make calculations manually, you put yourself at risk of error. Tax software, on the other hand, does not suffer from this same problem. Most software will guide you through your tax return step by step, and all you’ll need to do is follow its instructions while it takes care of the calculations for you.
Tax software works because it’s programmed to carry out very specific tasks with precision. So if you don’t want to have to double or triple-check every line of your tax return, opt for tax software—it’ll get it right, every time.
Moreover, all major tax software providers offer guarantees. If the software ever produces an error on your tax return, the company will pay all the fines and penalties associated with that error.
5. It Means Faster Refunds
When you use tax software, you get to do everything electronically. No more having to deal with snail mail, postage, or all the other hassles that come with doing your taxes by hand. Because your tax software automatically e-files your tax return for you, it means that your documents can be processed sooner—and your refund issued faster. For best results, opt to receive your refund as a direct deposit into your bank account.
6. It Can Save You Time and Money
Some versions of tax software can cost upwards of $100, but if your tax situation is quite simple, you may be able to rely on free tax software.
Leading tax preparation companies like TurboTax and H&R Block offer a free federal and state filing option for taxpayers with straightforward tax returns (W-2 earners who claim the standard deduction would fall under this category).
It's important to keep in mind that through TurboTax, roughly 37% of filers qualify for filing a Form 1040 return with limited credits, meaning they can submit their tax returns using only the IRS Form 1040, without the need to attach additional forms or schedules, simplifying the filing process for those eligible.
If your adjusted gross income (AGI) is under $73,000, you can also file your tax return directly with the IRS using IRS Free File.
Taxpayers with more complex tax situations, like freelancers, the self-employed, and small business owners can also use tax software to save themselves time, money, and energy. Instead of tracking deductions, mileage, credits, and more on a manual basis, you can let tax software do it for you. Simply make a note of your expenses online, and you’ll have the information you need waiting for you during tax time—rather than the other way around.
7. It’s Easy to Use
While the tax code is complex, tax software is not. Most software will guide you through your tax return in a step-by-step, question-and-answer format. For example, you may be asked if you have dependents, if you bought a home during the year, or if you’re single or married.
Your answers to these questions allow the software to find all the tax deductions and credits you qualify for. Luckily for you, this process happens behind the scenes, and you won’t have to do anything other than answer a list of yes or no questions.
8. It Unlocks Access to Expert Help
If you ever get stuck, have a question, or just want reassurance that you’re doing things right, you can get access to help and support via your tax software provider. With most software, you can purchase an add-on to have your tax return reviewed by a tax professional in a live session. Sometimes expert help is even included as part of your plan.
The add-on usually costs between $30 and $150, but it can make your life easier and the tax filing process much less stressful, especially if you’re transitioning to using tax software for the first time.
9. It’s Popular
Software is eating the world. As more and more services go digital, increasing numbers of in-person tasks can now be done online—and taxes are no exception.
It’s no surprise, then, that a vast majority of Americans prefer to use tax software. IRS publications suggest that 90% of taxpayers file their taxes online, and it’s likely so popular because it’s safe, reliable, convenient, and straightforward.
10. It’s Environmentally Friendly
Filing your taxes online will mean that you not only use less paper but also ink, pens, pencils, and other office supplies. This in turn helps the environment and lowers your personal carbon footprint.
Conclusion
If you’re still filing your taxes by hand in 2024, it’s time to consider going digital. Tax software is an easier, safer, faster, cheaper, and more straightforward way to file your taxes. So stop frying your brain with mental math. Let tax software do the heavy lifting for you, and spend the time saved doing something you enjoy instead.
