Dave Ramsey 5 Foundations – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree about everything, but they are largely on the exact 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.  E-filing is popular as it is a win-win for taxpayers and the IRS.

If you e-file your federal income tax return, you conserve the IRS money because its workers don’t need to spend time manually processing your return. And in return, you could find any refund you are owed quicker, especially in the event that you have it directly deposited into your bank account.

However, what about security?  And can digital filing actually give you access to all of the forms that you might need in case you’ve got a complex tax situation?  Are there ever situations when you can not e-file?  Let us look at the advantages of e-filing, and if it might be the very best filing option for your requirements.

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

  1. Quick affirmation your forms are obtained: The IRS will affirm a tax filing has been received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived . 
  2. Timely refunds: When you publish a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you are going to receive your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund process.

  3. Reduced chance of mistakes: According to the IRS, there’s approximately a 1 percent error rate on e-filed yields, compared with a 20% speed of errors on paper filings.  The IRS also provides more information on problems discovered on e-filed yields compared with paper returns.

  4. Easy payment procedure: If you owe the IRS money, it’s simpler to pay at your advantage if you e-file.  It’s possible to submit returns early and pay later if needed, as long as you pay from the April 15 filing deadline.  And you can schedule electronic funds 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. You also have the option to pay your balance by using the IRS Direct pay service from your 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 following the filing due date (typically April 15) can lead to interest and penalties.

  5. Digital storage of tax information: Submitting returns electronically implies there is a digital backup of your tax records.  If something happens to your paperwork, then you will have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and find those advantages — and the practice of doing this is easy.

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

    1. Use IRS Free File: If your adjusted gross income is $72,000 or not as you could be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is over $72,000 and you’re comfortable doing your taxes without any help, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide basic advice.  You can only do your federal return with all these kinds. 
    3. Utilize an online tax preparation service or tax software: Tax preparation 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 software asks you simple questions about your own life and finances to steer you through the completion of your types.  
    4. Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file yields.  However, eligibility for free aid is normally restricted based on income, and some providers cater to particular demographic groups.  The IRS maintains a database of licensed providers, but you should be aware this option is likely to be the most costly one. 

Using online tax prep software is far and away the favored approach of most taxpayers.  In fact, the IRS says it anticipated over four tax returns to be filed through tax return prep program.

Is e-filing really stable?

While e-filing is suitable, you could be worried about security — especially with so many data breaches.  But experts agree this isn’t a problem which should dissuade you by e-filing.

“E-filing a tax return has turned out to be a very secure way to file your taxes,” states Scott Grissom, vice president of product leadership, advertising and sales at LegalShield. “In fact, it may be more secure than paper filing since 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 the IRS has set security measures in place to keep your information safe.  “Trainers normally use IRS particular APIs that require ab sessions,” Chow says.  “All this is routed over TLS encrypted connections.”

It is very important to use a trusted service to help you record your taxes.  Chow advises not to e-file on a public computer or utilize an online connection that isn’t private.

Bottom line

For many taxpayers, it makes sense to e-file a yield since 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 make certain the information which you supply to transmit to the IRS will be kept secure.