Is e-filing really a much better way to file your taxes?
Americans and the IRS may not agree about everything, but they are mostly on precisely the same page when it comes to e-filing individual income tax returns.
Nearly all individual income tax returns submitted to the IRS are e-filed.
And in return, you can get any refund you are owed quicker, particularly if you have it directly deposited into your bank account.
However, what about security? And can electronic filing really provide you access to all the forms you may need if you’ve got a complex tax situation? Are there situations when you can not e-file? Let’s look at the advantages of e-filing, and whether it might be the best filing choice for your needs.
If you are Considering e-filing, some of the advantages include:
- Quick confirmation your forms have been received: The IRS will confirm a tax filing was received within one day of electronic submission. For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived .
Timely refunds: When you submit a paper filing, it may take six to eight weeks to receive a tax refund. With e-filing, you’ll receive your money in three weeks or less. Choosing direct deposit can also speed up the refund process.
Reduced likelihood of errors: According to the IRS, there’s around a 1 percent error rate on e-filed returns, compared with a 20% rate of mistakes on paper filings. The IRS also provides more information on problems discovered on e-filed yields compared with paper yields.
Simple payment process: If you owe the IRS money, it’s simpler to pay at your convenience when you e-file. It’s possible to submit returns early and pay later if necessary, provided that you pay by the April 15 filing deadline. And you can schedule electronic money transfers to easily send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. Additionally you have the choice to pay your balance by making use of 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 lead to penalties and interest.
Digital storage of tax information: Submitting returns electronically means there’s an electronic backup of your tax records. If something happens to your paperwork, you will have a digital backup.
The good news: Most taxpayers do opt to e-file and find those benefits — and the process of doing this is easy.
The forms do the math for you and provide basic guidance. You can only do your federal return with all these forms.
Using online tax prep software is far and away the preferred approach of the majority of taxpayers. Actually, the IRS says it expected more than four tax returns to be filed through tax return prep software.
Is e-filing really stable?
While e-filing is suitable, you could worry about security — especially with all these data breaches. But experts agree that this is not an issue which should dissuade you from e-filing.
“E-filing a tax return has proven to be a very secure way to file your taxes,” says Scott Grissom, vice president of product direction, marketing and sales at LegalShield. “In actuality, it can be more secure than paper filing as you’re sending your personal information through an encrypted network rather than exposing your information in the email.”
Dennis Chow, vice president of data security at SCIS Security, explains that the IRS has put safety measures in place to keep your information secure. “Vendors typically utilize IRS particular APIs that require token sessions,” Chow says. “All of this can be routed over TLS encrypted connections.”
It is important to employ a trustworthy service to help you record your taxes. Chow advises not to e-file on a public computer or use an online connection that isn’t private.
For most taxpayers, it is sensible to e-file a return 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 be certain that you use tax planning software from a dependable source, so you may ensure the information which you provide to transmit to the IRS will be kept protected.