Ask Dave Ramsey – What to Consider When Filing My Taxes Online

Is e-filing a much better way to record your taxes? 

Americans and the IRS may not agree on everything, but they’re largely on the exact same page when it comes to e-filing individual income tax returns.

The majority of individual income tax returns filed to the IRS are e-filed.  E-filing is a favorite because it is a win-win for taxpayers and the IRS.

When you e-file your federal income tax return, you conserve the IRS money because its employees do not need to spend time manually processing your return. In return, you can find any refund you’re owed faster, particularly in the event that you have it directly deposited to your bank accounts.

But what about safety?  And can digital filing really give you access to all the forms that you might need if you have a intricate tax situation?  Are there ever situations when you can not e-file?  Let us look at the benefits of e-filing, and if it might be the very best filing choice for your needs.

If you’re Considering e-filing, some of the advantages include:

  1. Quick confirmation your forms are obtained: The IRS will confirm a tax filing was received within 24 hours of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely. 
  2. Timely refunds: When you submit a paper filing, it may take six to eight months to be given a tax refund.  With e-filing, you are going to get your money in 3 weeks or not.  Choosing direct deposit may also accelerate the refund procedure.

  3. Reduced chance of errors: According to the IRS, there is around a 1% error rate on e-filed returns, compared with a 20% speed of errors on paper filings.  The IRS also provides more info on issues discovered on e-filed yields compared with paper yields.

  4. Simple payment procedure: If you owe the IRS money, it’s easier to pay at your advantage if you e-file.  You can submit returns early and pay afterwards if necessary, provided that you pay from the April 15 filing deadline.  And you can schedule electronic money transfers to send the IRS what you owe on a date of your choosing again, as long as the IRS receives your payment by Tax Day. Additionally you have the choice to pay your balance by using the IRS Direct pay service from the checking account or savings account, submitting a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) will result in penalties and interest.

  5. Digital storage of taxation data: Submitting returns electronically implies there’s an electronic copy of your tax records.  So if something happens to your paperwork, then you will have a digital backup.

The good news: Most taxpayers do decide to e-file and get those advantages — and the practice of doing this is easy.

How to e-file a tax return?

You have four options for submitting an electronically filed tax return to the IRS.

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is over $72,000 and you are comfortable doing your taxes without help, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide basic advice.  You can simply do your federal return with all these kinds. 
    3. Use an online tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These choices are an easy way to finish and e-file your forms.  Some software providers charge for their apps, Some are free.   The program asks you simple questions about your own life and finances to guide you through the completion of your types.  
    4. Get free, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  However, eligibility for free help is typically limited based on income, and a few providers cater to specific demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older. 
    5. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they’re licensed IRS e-file providers. The IRS maintains a record of authorized providers, but be aware this alternative is very likely to be the most costly one. 

Employing online tax prep software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it anticipated more than four in five tax returns to be submitted through tax return prep software.

Is e-filing really secure?

While e-filing is suitable, you may worry about safety — especially with so many data breaches.  But experts agree that this is not an issue that should deter you from e-filing.

“In actuality, it can be more secure than paper filing as you’re sending your personal information through an encrypted system rather than exposing your information in the mail.”

Dennis Chow, vice president of information security at SCIS Security, explains the IRS has set safety measures in place to keep your information safe.  “Trainers normally use IRS specific APIs that require ab sessions,” Chow says.  “All of this is routed over TLS encrypted connections”

It is important to employ a trusted service that will help you record your taxes.  Chow advises not to e-file on a computer or use an internet connection that is not private.

Bottom line

For many taxpayers, it is sensible to e-file a yield because it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just make certain that you use tax preparation software from a dependable source, so you may ensure the information which you provide to transmit to the IRS is going to be kept protected.