Filing taxes was a hectic task for everyone until the advent of the tax preparations of the software. This process made the process very easy and to utilize this tool, it’s very important to have your bank account and the routing numbers easily. These numbers are not only streaming the tax filing process but also giving a lot of benefits that can help to save your money as well as time. If you have any doubts like why is it useful to have your bank account and routing numbers when using tax preparation software? Read the blog.
Why Is It Useful to Have Your Bank Account and Routing Numbers When Using Tax Preparation Software?
Bank Account and Routing Numbers
You will have a bank account with a unique identifier account number that is assigned by your bank. This will help you to manage the transactions like deposits and withdrawals. The routing number is a nine digit code that identifies your bank and makes sure the funds are directed to the correct institution during the transactions. These two things- account number and routing number is very essential for enabling features like direct deposits and automatic payments. Everything is influenced by the new digital technology and then why avoid the tax payments digitally?
Benefits of Using Tax Preparation Software
Direct Deposit of Your Tax Refund
One of the best and primary advantages of using tax preparation software is the direct deposit. By routing numbers and bank account number providing, your account will be able to receive the tax or refund via direct deposit. This method will give you a fast refund within 21 days and is also more secure than waiting for a paper check that can be stolen.
On-Time Payment of Tax Obligations
The payment of taxes from your account will be depicted directly. If you select the automated option, you don’t need to be reminded all month. Even if you forgot, it will pay automatically and save you from the fines. Not only this helps from late penalties but also penalties of mailing delays.
Establish Payment History
If you are using software for linking the bank account, you can create a clear and traceable payment history. This can be particularly very useful for recording all transactions, addressing any issues in payments that are related with these tax authorities.
Electronic Filing Verification
There are several tax authorities that require the bank account and routing details for the identification verification, if you are filming tax electronically. This will increase your security in the tax filing and also make sure the process is efficient and protective.
Security and Fraud Prevention
The secured transactions without any fraud activities are very important here. The tax preparation software is helpful to make that one. The banks have clear and strong measures that take place to prevent such fraudulent activities.
Faster Refund Processing
Other than paying manually, tax software already has your account number and routing details, so it makes a quick payment without any delay. It will also help to reduce the time that you have to wait and receive money.
Automatic Payment of Tax Prep Fees
In manual ways you have to fill the forms, mail checks and it is very time consuming. If you prefer the software, they already have all the details and help When you owe taxes, having your bank information on hand allows you to pay directly from your account. This can be automated, making it one less thing to worry about during tax season.
Potential Risks of Using Tax Preparation Software
Incorrect Bank Information
If you accidentally put the account information incorrectly, your refund will be delayed or deposited into someone else’s account. So it’s very important to check all the details you include while giving information.
Security Concerns
Even though the tax software is very secure, you have to share the bank account and the routing numbers that still carries high risk of unauthorized access or fraud activities. There is a way to foolproof and breaches are there and you need to be careful in it.
Privacy Matters
When you are entering all details there, you will have only less control over your financial data. All your sensitive information, balance, transactional all will be not private even if they manage it securely.
Limited Control
Manually you can pay the amount when you wish and if you use the automated option, they will pay the tax at the fixed time they set and you have no control on the time. If the tax amount is not in your account, then you have to pay penalties also.
How to Avoid Such Risks?
Mostly you can avoid such mistakes in a really effective way by following these tips.
Use Secure Networks
You should always use a secure network. If you are using a public wifi, then don’t enter the bank details. You should prefer a secured and private network only when you enter the details. Otherwise it will be very vulnerable to hack it.
Monitor Your Bank Accounts
You have to do regular checkups and monitoring for all the unauthorized transactions. Not even one can’t be neglected or avoided. If you notice anything unusual, report it to your bank immediately to prevent further issues.
Keep Your Software Updated
Always make sure that your tax preparation software is always updated with the latest security updations. Such updates are very often including the important security improvements that will help you to protect the information from new threats.
Use Strong Passwords
This is the most important thing you should remember. Don’t use any kind of easy or simple password like 12345 or alphabets. Always try to make hard passwords and also don’t forget them.
Be Careful with Emails and Phone Calls
You should be very careful about giving the bank details to anyone. There are so many spam calls by asking the bank for information over email or any phone calls. The scammers are often using so many phishing tactics and strategies to gain access to sensitive information and to verify any requests before providing the details.
Consult with a CPA Tax Preparer
Sometimes you may be unsure about the tax software or complex payment methods. If that is so you can consult a CPA tax preparer for guidance. By getting proper guidance and paying tax in software for the first time, you will be able to pay tax in upcoming days on your own. The guidance will help you to file tax correctly and securely.
Is This Idea Good to Use Tax Software?
Like said above, even though it has several risk factors, the tax preparation software will effectively manage your taxes and all things. The benefits like quick payments and faster refunds will secure the payments and make it easy to use. If you take the precautions carefully, tax software will be a good option for it.
Alternative Options
If you are not comfortable with sharing bank details with the tax software, there are certain alternative options for it. For this, you can choose to receive any refunds via proper paper checkups. You can also pay taxes by mailing a check or using your credit card even if it involves some additional fees. If you are able to get direct access with a bank, that will also be a very good option for it.
