Dave Ramsey Baby Step 2 – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree on everything, but they’re mostly on precisely 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 a favorite because it is a win-win for taxpayers and the IRS.

And in return, you could get any refund you’re owed quicker, particularly if you have it directly deposited into your bank accounts.

But what about security?  And can digital filing really give you access to all of the forms that you may need in case you’ve got a intricate tax situation?  Are there situations when you can’t e-file?  Let us look at the advantages of e-filing, and if it may 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 received: The IRS will confirm a tax filing has been received within 24 hours of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived safely. 

    Timely refunds: When you publish 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 3 weeks or not.  Choosing direct deposit can also speed up the refund process.

  2. Reduced likelihood of mistakes: In accordance with the IRS, there is approximately a 1% error rate on e-filed yields, compared with a 20% rate of mistakes on paper filings.  The IRS also provides more information on issues discovered on e-filed returns compared with paper returns.

  3. Easy payment process: If you owe the IRS money, it is simpler to cover at your convenience if you e-file.  You can submit returns early and pay afterwards if needed, provided that you pay from 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. You also have the option to pay your balance by using the IRS Immediate pay service from your checking or savings accounts, filing a credit card through a payment processor for a fee, or paying by check or money order.  Just be aware delaying payment following the filing due date (typically April 15) will result in interest and penalties.

  4. Digital storage of tax information: Submitting returns electronically implies there’s a digital copy of your tax documents.  So if something happens to your paperwork, 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 so is simple.

The way 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 could be able to use the IRS Free File program. 
    2. Free File Fillable Forms — 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 standard advice.  You can simply do your federal return with these forms. 
    3. Utilize an internet tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These options are a simple way to finish and e-file your own forms.  Some software providers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and finances to steer you through the completion of your forms.  
    4. Get complimentary, in-person tax help: 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 a few providers cater to particular demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older. 
    5. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they’re authorized IRS e-file providers. The IRS maintains a record of authorized providers, but be aware this option is likely to be the most costly one. 

Employing online tax prep software is far and away the favored approach of most 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 security — particularly with all these data breaches.  But experts agree this isn’t a problem that should deter you from e-filing.

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

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

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

Bottom line

For many taxpayers, it makes sense to e-file a yield since 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 make sure that you use tax preparation software from a dependable source, so that you can make certain the information which you provide to transmit to the IRS will be kept secure.