Is e-filing really a much better way to record your taxes?
Americans and the IRS might not agree on everything, but they are mostly on the same page when it comes to e-filing individual income tax returns.
The majority of individual income tax returns submitted to the IRS are e-filed. E-filing is popular because it’s a win-win for taxpayers and the IRS.
In return, you could find any refund you’re owed quicker, especially if you have it directly deposited to your bank accounts.
But what about security? And can digital filing actually give you access to all of the forms you may need in case you have a complex tax situation? Are there situations when you can’t e-file? Let’s look at the advantages of e-filing, and if it might be the best filing choice for your needs.
If you’re Considering e-filing, some of the advantages include:
- Quick confirmation your forms are received: The IRS will affirm a tax filing was received within 24 hours of digital submission. For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived .
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 are going to receive your money in three weeks or less. Choosing direct deposit can also speed up the refund procedure.
Reduced chance of errors: According to the IRS, there’s approximately a 1% error rate on e-filed yields, compared with a 20% speed of errors on paper filings. The IRS also provides more info on issues discovered on e-filed returns compared with paper yields.
Easy payment procedure: If you owe the IRS money, it is simpler to cover at your advantage 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 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 making use of the IRS Immediate pay service from your checking account or savings account, submitting a credit card through a payment processor for a fee, or paying by check or money order.
Digital storage of tax data: Submitting returns electronically implies there’s a digital backup of your tax documents. 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 benefits — and the practice of doing this is easy.
You have four options for submitting an electronically filed tax return to the IRS.
- 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.
- Free File Fillable Forms — If your income is more than $72,000 and you are comfortable doing your earnings 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.
- Use an internet tax preparation service or tax applications: Tax prep software and online filing services are options. These options are a simple way to complete and e-file your forms. Some software providers charge for their apps, Some are liberated. The software asks you simple questions about your life and finances to steer you through the completion of your forms.
- Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns. However, eligibility for free aid is typically limited based on income, and some services appeal to particular demographic groups. For example, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older.
- Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they’re licensed IRS e-file providers. The IRS maintains a database of licensed providers, but you should 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 the majority of taxpayers. In fact, the IRS says it expected more than 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 safety — especially with so many data breaches. But experts agree this isn’t a problem that should deter you from e-filing.
“E-filing a tax return has proven to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product direction, advertising and revenue at LegalShield. “In fact, it may be more secure than paper filing since you’re sending your private information through an encrypted system as opposed to exposing your information in the email.”
Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has put safety measures in place to keep your data safe. “Trainers normally use IRS specific APIs that require token sessions,” Chow says. “All of this can be routed over TLS encrypted links .”
It is very important to use a trustworthy service to assist you file your taxes. Chow advises not to e-file on a public computer or use an internet connection which is not private.
For many taxpayers, it makes sense to e-file a return since it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment choices. Just be certain to use tax preparation software from a dependable source, so that you can ensure the information which you provide to transmit to the IRS is going to be kept protected.