Dave Ramsey Envelope System Ideas – Is It Best To E-File My Taxes?

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

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

The majority of individual income tax returns filed to the IRS are e-filed. 

If you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. In return, you could get any refund you are owed quicker, especially if you have it directly deposited to your bank accounts.

However, what about safety?  And can digital filing really give you access to all of the forms that you may need if you have a complex 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 are 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 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 not.  Choosing direct deposit can also accelerate the refund process.

  2. Reduced chance of mistakes: In accordance with the IRS, there is approximately a 1% error rate on e-filed returns, 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 returns.

  3. Easy payment procedure: If you owe the IRS money, it is easier to pay at your advantage when you e-file.  It’s possible to submit returns early and pay later if necessary, 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, 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 the checking account or savings accounts, submitting a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) can lead to penalties and interest.

  4. Digital storage of tax information: Submitting returns electronically implies there is an electronic backup of your tax records.  So if something happens to your paperwork, you will have an electronic backup.

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

You have four options 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 Forms — If your income is more than $72,000 and you are comfortable doing your taxes without assistance, you can use Free File Fillable Forms from the IRS. The forms do the math for you and offer standard advice.  You can simply do your federal return with these kinds. 
    3. Use an online tax preparation service or tax applications: Tax prep software and online filing services are options.  These choices are an easy way to complete and e-file your forms.  Some software providers charge for their apps, Some are free.   The software asks you simple questions about your life and finances to steer you through the completion of your types.  
    4. Get free, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free aid is typically limited based on earnings, and some providers cater to specific demographic groups. 
    5. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they’re authorized IRS e-file providers. The IRS maintains a database of authorized providers, but you should be aware this alternative is likely to be the most costly one. 

      Using online tax prep software is far and away the preferred approach of most taxpayers.  In fact, the IRS says it expected more than four tax returns to be submitted through tax return prep program.

      Is e-filing really secure?

      While e-filing is convenient, you could worry about safety — especially with all these data breaches.  But experts agree that this is not a problem that should deter you from 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 information in the email.”

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

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

      Bottom line

      For many taxpayers, it makes sense 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 options.  Just make certain that you use tax preparation software from a dependable source, so you may make certain the information you provide to transmit to the IRS is going to be kept secure.