Dave Ramsey Chapter 12 Vocabulary – Is It Best To E-File My Taxes?

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

Americans and the IRS might not agree on everything, but they are largely on 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. 

In return, you could get any refund you are owed faster, especially if you have it directly deposited into your bank account.

But what about safety?  And can electronic filing really give you access to all the forms that you might need in case you have a complex 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 best filing choice for your needs.

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

  1. Quick affirmation your forms have been received: The IRS will affirm a tax filing has been received within 24 hours of digital 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 3 weeks or not.  Choosing direct deposit may also speed up the refund process.

  2. Reduced likelihood of mistakes: In accordance with the IRS, there is around 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 problems discovered on e-filed yields compared with paper returns.

  3. Easy payment procedure: 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 later if needed, provided that you pay from 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. You also have the choice to pay your balance by using the IRS Immediate pay service from your checking or savings account, submitting a credit card through a payment processor for a fee, or paying by check or money order. 

  4. Digital storage of taxation data: Submitting returns electronically means there is a digital backup of your tax documents.  So if something happens to your paperwork, then you will have an electronic backup.

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

You have four choices for submitting an electronically filed tax return to the IRS.

    1. Use IRS Free File: If your adjusted gross income is $72,000 or not as you may be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is more than $72,000 and you’re comfortable doing your earnings without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide standard guidance.  You can only do your federal return with these forms. 
    3. Utilize an internet tax preparation tax or service applications: Tax preparation software and online filing services are options.  These options are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are free.   The software asks you simple questions about your life and financing to guide you through the completion of your forms.  
    4. Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is normally restricted based on income, and a few providers cater to particular demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older.  The IRS maintains a database of authorized providers, but be aware this alternative is very likely to be the most costly one. 

Employing online tax prep software is far and away the favored approach of most taxpayers.  Actually, the IRS says it anticipated more than four tax returns to be filed through tax return prep software.

Is e-filing really stable?

While e-filing is convenient, you may worry about security — particularly with all these data breaches.  But experts agree this isn’t a problem that should deter you by e-filing.

“In fact, it may be more secure than paper filing as you’re sending your private information through an encrypted system as opposed to exposing your data in the mail.”

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

It’s very important to use a trustworthy service that will help you file your taxes.  Chow advises not to e-file on a public computer or utilize an internet connection that isn’t confidential.

Bottom line

For most taxpayers, it makes sense to e-file a return since it is the most convenient way to submit 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 dependable source, so that you may make certain the information which you supply to transmit to the IRS is going to be kept secure.