Dave Ramsey Chapter 3 Money In Review – Is It Best To E-File My Taxes?

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

Americans and the IRS might not agree about everything, but they are largely on precisely the exact same page in regards to e-filing individual income tax returns.

Nearly all individual income tax returns filed to the IRS are e-filed. 

And in return, you could find 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 digital filing really provide you access to all the forms 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 advantages of e-filing, and if it might be the best filing choice for your requirements.

If you’re thinking about e-filing, some 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 electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment that 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 can also accelerate the refund process.

  3. Reduced chance of errors: According to the IRS, there is approximately a 1% error rate on e-filed returns, compared with a 20% speed of errors on paper filings.  The IRS also provides more info on problems discovered on e-filed returns compared with paper yields.

  4. Easy payment procedure: If you owe the IRS money, it’s easier to cover at your convenience when you e-file.  It’s possible to submit returns early and pay afterwards if needed, provided that you pay from the April 15 filing deadline.  Additionally you have the choice to pay your balance by making use of the IRS Immediate pay service from your checking or savings account, 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) can lead to interest and penalties.

  5. Digital storage of tax data: Submitting returns electronically means there’s a digital copy of your tax documents.  So if something happens to your paperwork, you will have a digital backup.

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

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

The types do the math for you and provide basic guidance.  You can simply do your federal return with these kinds. 

  • Use an internet tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These options are an easy way to finish and e-file your forms.  Some applications providers charge for their apps, Some are liberated.   The software asks you simple questions about your own life and financing to steer you through the completion of your types.  
  • 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 services cater to specific demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they’re authorized IRS e-file providers. The IRS maintains a record of authorized providers, but you should be aware this option is very likely to be the most costly one. 
  • Using online tax prep software is far and away the favored approach of the majority of taxpayers.  Actually, the IRS says it anticipated more than four tax returns to be submitted through tax return prep software.

    Is e-filing really secure?

    While e-filing is convenient, you may be worried about security — especially with all these data breaches.  But experts agree that this is not an issue that 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, marketing and revenue at LegalShield. “In fact, it can be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your data in the mail.”

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

    It is important to use a trustworthy service to help you file your taxes.  Chow advises to not e-file on a computer or use an online connection that isn’t private.

    Bottom line

    For many taxpayers, it is sensible to e-file a return because 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 make sure to use tax planning software from a dependable source, so you may make certain the information you provide to transmit to the IRS is going to be kept protected.