Dave Ramsey Chapter 11 Answers – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they’re 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 because it’s a win-win for taxpayers and the IRS.

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 can find any refund you are owed faster, particularly if you have it directly deposited to your bank account.

However, what about security?  And can electronic filing actually provide you access to all the forms you may need if you’ve got a complex tax situation?  Are there situations when you can not e-file?  Let’s look at the benefits of e-filing, and if it may be the best filing choice for your needs.

If you are thinking about e-filing, a Few of the advantages include:

  1. Quick affirmation your forms are received: The IRS will affirm a tax filing was received within one day of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived safely. 
  2. Timely refunds: When you submit a paper filing, it can take six to eight months to receive a tax refund.  With e-filing, you are going to receive your money in three weeks or less.  Choosing direct deposit may also speed up the refund procedure.

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

  4. Simple payment procedure: If you owe the IRS money, it is simpler to cover at your convenience if you e-file.  It’s possible to submit returns early and pay afterwards if needed, provided that you pay by the April 15 filing deadline.  And you can schedule electronic funds transfers to easily 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 choice to pay your balance by using the IRS Immediate pay service from the checking account or savings accounts, submitting a credit card through a payment processor for a fee, or paying by check or money order. 

  5. Digital storage of taxation information: Submitting returns electronically means there is a digital backup of your tax documents.  If something happens to your paperwork, then you’ll have an electronic backup.

The good news: Most taxpayers do opt to e-file and get those advantages — and the process of doing this is easy.

How to e-file a tax return?

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

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may have the ability 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 earnings without any assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer standard guidance.  You can only do your federal return with these forms. 
    3. Use an online tax preparation service or tax applications: Tax preparation software and online filing services are options.  These options are an easy way to finish and e-file your own forms.  Some software providers charge for their programs, Some are free.   The program 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 aid: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free help is normally restricted based on income, and some providers appeal to specific demographic groups.  The IRS maintains a database of authorized providers, but 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 anticipated more than four in five 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 so many data breaches.  But experts agree that this is not a problem that should deter you by e-filing.

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

Dennis Chow, vice president of information security at SCIS Security, explains the IRS has put security measures in place to keep your information secure.  “Vendors typically utilize IRS specific APIs that require token sessions,” Chow says.  “All of this can be routed over TLS encrypted links .”

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

Bottom line

For many taxpayers, it is sensible 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 that you may make certain the information you provide to transmit to the IRS will be kept secure.