Dave Ramsey Budget Spreadsheet – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they are largely on precisely the 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 could find any refund you are owed quicker, particularly in the event that you have it directly deposited into your bank account.

However, what about security?  And can digital filing really provide you access to all the forms that you may need if you’ve got a intricate tax situation?  Are there situations when you can not e-file?  Let us look at the benefits of e-filing, and if it may be the very best filing choice for your requirements.

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

  1. Quick confirmation your forms have been received: The IRS will confirm a tax filing was received within 24 hours of digital 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 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 may also accelerate the refund process.

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

  4. Easy payment process: If you owe the IRS money, it is easier to cover at your advantage when you e-file.  You can submit returns early and pay afterwards if necessary, as long as 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, 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 account or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order. 

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

The fantastic news: Most taxpayers do opt to e-file and get those benefits — and the process of doing so is easy.

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program.  The forms do the math for you and provide standard guidance.  You can simply do your federal return with these forms. 
    2. Utilize an online tax preparation tax or service applications: Tax prep software and online filing services are options.  These options are an easy way to complete and e-file your forms.  Some applications suppliers charge for their programs, Some are free.   The software asks you simple questions about your life and finances to steer you through the completion of your forms.  
    3. Get free, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on earnings, and a few providers appeal to specific demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older. 
    4. 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 licensed providers, but you should be aware this alternative is likely to be the most costly one. 

Employing online tax preparation software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it expected over four in five tax returns to be submitted through tax return prep software.

Is e-filing really secure?

While e-filing is suitable, you could worry about security — especially with so many data breaches.  But experts agree this isn’t an issue 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,” says Scott Grissom, vice president of product leadership, advertising and sales at LegalShield. “In fact, it may be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your information in the mail.”

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

It’s very important to employ a trusted service to assist you file your taxes.  Chow advises to not e-file on a computer or use an internet connection that isn’t confidential.

Bottom line

For most taxpayers, it is sensible to e-file a return because it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just make sure that you use tax planning software from a trusted source, so you may make certain the information you provide to transmit to the IRS will be kept protected.