Dave Ramsey Chapter 2 – Is It Best To E-File My Taxes?

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

Americans and the IRS may not agree about everything, but they’re largely on precisely the exact 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. 

And in return, you can get any refund you are owed faster, particularly in the event that you have it directly deposited to your bank account.

But what about safety?  And can digital filing actually give you access to all of the forms you might need in case 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 whether it may be the best filing choice for your requirements.

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

  1. Quick affirmation your forms have been obtained: The IRS will affirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived . 

    Timely refunds: When you submit a paper filing, it can take six to eight months to be given a tax refund.  With e-filing, you’ll get your money in 3 weeks or less.  Choosing direct deposit may also accelerate the refund process.

  2. Reduced chance of errors: In accordance with the IRS, there’s around 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 problems discovered on e-filed returns compared with paper returns.

  3. Easy payment procedure: If you owe the IRS money, it’s simpler to pay at your convenience if you e-file.  You can submit returns early and pay later if necessary, provided that you pay by the April 15 filing deadline.  Additionally you have the option to pay your balance by using the IRS Direct pay service from the checking account or savings account, filing a credit card through a payment processor for a commission, 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.

  4. Digital storage of tax data: Submitting returns electronically means there’s a digital backup of your tax records.  If something happens to your paperwork, you’ll have a digital backup.

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

The way to e-file a tax return?

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you could have the ability to use the IRS Free File program.  The forms do the math for you and provide standard guidance.  You can only do your federal return with these forms. 
    2. Utilize an online tax preparation service or tax software: Tax prep software and online filing services are options.  These options are a simple way to finish and e-file your forms.  Some software suppliers charge for their programs, Some are free.   The program asks you simple questions about your own life and financing to guide you through the completion of your types.  
    3. Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free aid is typically limited based on earnings, and a few services cater to specific demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older.  The IRS maintains a record of licensed providers, but be aware this alternative is very likely to be the most costly one. 

Using online tax preparation software is far and away the favored approach of the majority of taxpayers.  In fact, the IRS says it expected over four in five tax returns to be filed through tax return prep software.

Is e-filing really stable?

While e-filing is suitable, you could be worried about safety — especially with so many data breaches.  But experts agree this isn’t an issue which should dissuade you from e-filing.

“E-filing a tax return has turned out to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product leadership, marketing 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 data in the mail.”

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

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

Bottom line

For many 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 easy payment options.  Just be certain that you use tax preparation software from a trusted source, so you can make certain the information you supply to transmit to the IRS is going to be kept protected.