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Are there any pitfalls to filing my taxes online rather than downloading and installing a program on my computer?

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Disadvantages:

  • People who run the site have access to your SS#, income, birth date, etc.
  • Site could be compromised, along with your personal information
  • Your information is being sent over Internet lines (although it will be encrypted, making it safer than mailing your taxes, IMO).

Advantages:

  • Can potentially store and remember information from last year's return - speeding things up.
  • E-filed returns are processed faster
  • Lots of good free sites (e.g., Taxact.com)

In my opinion, the convenience and price (free!) of online options make doing your taxes online worth the negligible risks.

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Depends on the online service, of course, but for example H&R Block at Home was fine for me last year. No problems at all.

If anything, it may be better to file them online with a reputable service because they can update things immediately (no downloading updates required) if tax laws change, as they can.

  • Yeah, that is one of the most annoying things about TurboTax when you use the desktop version. During tax season, almost every time you open it up, you have to wait for it to download updates! – pkaeding Jan 29 '11 at 0:32
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Advantage of filing online (at least with TurboTax) is that they keep a record of your prior year taxes on their servers. Also, you could fill some stuff out at work, and then go home and continue where you left off. You also wouldn't have to mess with installing software.

File online.

  • Advantages of filing offline (such as with TurboTax) is that you can keep a record of your prior year taxes on your computer. (Or in Dropbox.) – stevepastelan Feb 4 '16 at 15:37
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I don't like keeping my tax information online. Personally, I buy TaxCut from Amazon for $25-30. I store my info securely on resources under my control.

Call me a luddite or a weirdo, but I also file using paper, because I don't see the advantage of paying for the privilege of saving the government time and money.

  • 1
    <kidding> You're a luddite and a weirdo. </kidding> I've used TaxCut before and it's a good product. +1 (and that says a lot because we're nipping at each other's heels for reputation!) – mbhunter Jan 29 '11 at 7:17
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Turbotax online is one of the best web applications I've ever used. It's incredibly seamless and you don't even realize you're using a browser instead of an installed desktop application.

I like it because Turbotax will store your old returns for you, and prepopulate fields based upon prior year returns.

It's a fantastic service.

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I have used TurboTax successfully for a couple of years. In addition to things already mentioned, it has some forums where you can get some simple questions answered (with complex ones it's always better to consult the professional) and it can import some data from your salary provider if you're lucky (some companies are supported, some aren't) - then you save time on filling out W2s, and can allow you to track your donations with sister site ItsDeductible.com, compare data with last year, etc. Not sure how desktop software compares.

So far I didn't see any downsides except for, of course, the fact that your information is available online. But in our times most companies offer online access to earnings statements, etc., anyway, and so far the weakest link for the financial information has proven to be retailers, not tax preparers.

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