Is e-filing really a better way to record your taxes?
Americans and the IRS may not agree on everything, but they’re largely 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.
When you e-file your federal income tax return, you save the IRS cash because its employees do not need to spend time manually processing your return. In return, you could get any refund you are owed faster, especially in the event that you have it directly deposited to your bank accounts.
However, what about security? And can electronic filing actually provide you access to all of the forms that you may need if you have a complex tax situation? Are there situations when you can’t e-file? Let’s look at the benefits of e-filing, and if it may be the very best filing option for your needs.
If you’re thinking about e-filing, a Few of the advantages include:
- Quick affirmation your forms are received: The IRS will affirm 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 receive a tax refund. With e-filing, you are going to get your money in three weeks or less. Choosing direct deposit can also speed up the refund procedure.
Reduced likelihood of errors: According to the IRS, there is approximately a 1 percent error rate on e-filed returns, compared with a 20% speed of errors on paper filings. The IRS also provides more information on problems discovered on e-filed returns compared with paper yields.
Easy payment process: If you owe the IRS money, it is simpler to pay at your advantage if you e-file. You can submit returns early and pay later if necessary, as long as you pay by the April 15 filing deadline. You also have the choice to pay your balance by using the IRS Direct pay service from the checking account 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 penalties and interest.
Digital storage of taxation information: Submitting returns electronically means there’s a digital copy of your tax records. So if something happens to your paperwork, you will have an electronic backup.
The good news: Most taxpayers do opt to e-file and get those benefits — and the practice of doing this is simple.
How to e-file a tax return?
You have four choices for filing an electronically filed tax return to the IRS.
The forms do the math for you and provide basic advice. You can only do your federal return with these forms.
Employing online tax prep software is far and away the preferred approach of the majority of taxpayers. In fact, the IRS says it expected over 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 safety — particularly with all these data breaches. But experts agree that this isn’t a problem which should dissuade you by 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 leadership, advertising and sales at LegalShield. “In fact, it can be more secure than paper filing since you’re sending your personal information through an encrypted network as opposed to exposing your information in the email.”
Dennis Chow, vice president of information security at SCIS Security, clarifies that the IRS has set security measures in place to keep your data safe. “Vendors typically utilize IRS specific APIs that need ab sessions,” Chow says. “All of this can be routed over TLS encrypted connections.”
It is important to use a trusted service that will assist you file your taxes. Chow advises to not e-file on a computer or utilize an internet connection that isn’t confidential.
For many taxpayers, it makes sense to e-file a return because 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 sure that you use tax preparation software from a trusted source, so you can make certain the information which you supply to transmit to the IRS is going to be kept secure.