Tech and Taxes

Tax Return

I work a summer job and pay for some of my own schooling, so my finances aren’t as simple as some college students’ are (though I’m sure there are also plenty of college kids out there with more confusing finances than mine!). I have to file taxes, of course, and my parents have asked me to take care of my own taxes this year--the first time I’ve ever had to do so. They’ve offered to help a bit, but I’m probably going to be working on this mostly while at school, not at home with them, so I thought I might use tax software instead. My question, though, is this: is it really safe to use software for taxes and file online? What sorts of long-term risks, if any, might I be opening myself up to by recording sensitive financial data on a computer?

More than a third--34.5%--of all Americans file their taxes using digital tax software products. Such tax programs allow you to print and mail your tax return if you wish, but many of us choose instead to “e-file”--that is, file taxes online, which the IRS allows.

But you have a lot of sensitive information in your tax return. Your social security number, address, income information, and more are all in there. What if someone untrustworthy wanted to intercept your e-filing? What about hackers that might target the makers of the tax software?

The short answer, say analysts at information security company Terbium Labs, is that e-filing is quite safe. But there are a few caveats to keep in mind.

First, not all tax software is created equal. While most of the major brands of tax software enjoy good reputations for security, some others--particularly free programs that compete with the big brands--have had some issues in the past. The Online Trust Alliance found that 46% of tax software does not meet their high standards for security (but, again, most big brands did just fine).

So you’ll want to use a reputable program. You’ll also want to make sure that you’re handing your half of the security responsibilities: you need to file on a secure network. Your tax data will be encrypted when sent to the IRS, but that won’t do you much good if your computer itself is not secure. Saving a PDF file of your return is a good idea, but without some common-sense computer security measures, it could leave you exposed to hacking methods much simpler than those necessary to intercept encrypted file transfers.

Ultimately, say the Long Island tax attorneys at Tax Problem Law Center, any method of filing taxes has its pros and cons. As long as yours leaves you with a record of your filing and delivers your filing safely to the IRS, you’re doing the best you can. In some ways, e-filing is safer than filing by mail--mail can be stolen or intercepted without the high-tech know-how necessary to do the same to encrypted file transfers. If you use your common sense and a reliable program, there’s no need to worry.

“In this world nothing can be said to be certain, except death and taxes.” -- Benjamin Franklin

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