Dale Carnegie Session 12 – Should I E-file My Taxes Online

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

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

Nearly all individual income tax returns submitted to the IRS are e-filed.  E-filing is a favorite as it’s a win-win for taxpayers and the IRS.

In return, you can find any refund you are owed quicker, particularly if you have it directly deposited into your bank accounts.

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

If you are thinking about e-filing, some of the advantages include:

  1. Quick affirmation your forms have been obtained: The IRS will confirm a tax filing has been received within one day of digital submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived safely. 

    Timely refunds: When you submit a paper filing, it can take six to eight weeks to be given a tax refund.  With e-filing, you’ll get your money in three weeks or not.  Choosing direct deposit may also speed up the refund process.

  2. Reduced chance of mistakes: In accordance with the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% rate of mistakes on paper filings.  The IRS also provides more info on issues discovered on e-filed returns compared with paper returns.

  3. Simple payment process: If you owe the IRS money, it’s simpler to pay at your convenience if you e-file.  You can submit returns early and pay later if necessary, provided that you pay by the April 15 filing deadline.  And you’re able to schedule electronic money transfers to send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. You also have the option 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. 

  4. Digital storage of taxation data: Submitting returns electronically means there is an electronic copy of your tax records.  So if something happens to your paperwork, then you will have an electronic backup.

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

How to e-file a tax return?

  • Free File Fillable Types — If your income is more than $72,000 and you’re comfortable doing your taxes without any help, you can use Free File Fillable Forms from the IRS. The forms do the math for you and provide basic guidance.  You can only do your federal return with all these kinds. 
  • Use an online tax preparation tax or service applications: Tax prep software and online filing services are alternatives.  These options are an easy way to complete and e-file your forms.  Some software suppliers charge for their programs, Some are free.   The program asks you simple questions about your own life and finances to steer you through the completion of your forms.  
  • Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is normally restricted based on earnings, and some services appeal to particular demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file yields for you if they are licensed IRS e-file providers. The IRS maintains a record of licensed providers, but you should be aware this alternative is likely to be the most costly one. 

    Using online tax prep software is far and away the favored approach of the majority of taxpayers.  In fact, the IRS says it expected more than four in five tax returns to be filed through tax return prep software.

    Is e-filing really secure?

    While e-filing is convenient, you may worry about security — especially with all these data breaches.  But experts agree that this isn’t a problem which should deter you by e-filing.

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

    Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has put security measures in place to keep your information secure.  “Trainers normally use IRS specific APIs that require token sessions,” Chow says.  “All this can be routed over TLS encrypted links .”

    It’s very important to use a trustworthy service that will assist you file your taxes.  Chow advises not to e-file on a computer or use an internet connection which is not confidential.

    Bottom line

    For most taxpayers, it makes sense to e-file a yield because it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just be sure that you use tax planning software from a trusted source, so that you can ensure the information you supply to transmit to the IRS will be kept protected.