Most of us are afraid to file our tax forms. Real estate professionals, in addition to dealing with regular business forms, also have to file 1099-S forms every time they close a sale. Many companies postpone filing, doing the full year’s forms at the end of the year instead of when they file the HUD-1 Settlement Statement. Agents today have the option of filing 1099-S forms electronically, but is that the best option? There is a lot of information about the process, not all of it accurate, and we wanted to get to the reality of the matter.

Electronic Filing Benefits

One of the biggest benefits of e-filing is that it’s so simple that there’s no reason to put it off until the end of the year. HUD’s 1099-S Electronic Filing Settlement Statement Software makes it literally a click away. It becomes an automatic part of the real estate closing so you can close the file immediately and get on with your business. There’s no danger of going overboard, and you don’t have to fear the backlog of submissions at the end of the year.

Electronic filing is more accurate than paper filing. The software pulls the necessary information directly from the HUD form so you know the information on the 1099-S is correct. You don’t have to worry about transposing digits or accidentally pulling the wrong number off the form. Fewer errors mean fewer IRS filings and a faster closing.

E-Filing Myths

As we stated earlier, not all of the information you can find about e-filing is accurate. These are the most common myths about electronic 1099 forms.

• Not a real document: There have been countless court cases over the validity of electronic documents. Multiple legal precedents have made it clear: electronic documents are just as valid as paper ones.

• The IRS does not accept them: the tax agency has embraced digital information in recent years. The IRS not only accepts electronic filing, but prefers it. The IRS has specific format requirements for filing, but the title closing software will take care of that for you.

• It’s insecure: With all the stories of hacking and identity theft, it’s a little scary to transmit tax information over the Internet. However, if you deal with a trusted provider, the 1099-S is not transmitted in a way that no one else can read it. The transmission is encrypted, so if it is intercepted, it will be gibberish to anyone but the recipient.

• It’s Expensive – There is usually a small fee associated with filing electronically, just like there is with filing your 1040. This fee is arguably higher than the cost of a stamp, but you are saving more than postage. You’re saving valuable time, and you’re minimizing the chance of incorrect or misfiled forms, saving even more time.

As with any electronic software or service, you should deal with a reputable provider. Find an experienced provider of real estate and legal practice management software to find secure, easy, and affordable 1099 e-filing.