Dave Ramsey Every Dollar – 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 on 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 popular because it’s a win-win for taxpayers and the IRS.

And in return, you can find any refund you are owed quicker, particularly in the event that you have it directly deposited into your bank accounts.

However, what about security?  And can digital filing really provide you access to all of the forms you may need if you have a complex tax situation?  Are there situations when you can’t e-file?  Let us look at the benefits of e-filing, and if it might be the best filing option for your requirements.

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

  1. Quick confirmation your forms are obtained: The IRS will affirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS does not 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 three weeks or not.  Choosing direct deposit can also accelerate the refund process.

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

  3. Simple payment process: If you owe the IRS money, it’s simpler to pay at your advantage 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’re able to schedule electronic money 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. Additionally you have the option to pay your balance by using the IRS Immediate pay service from the 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 penalties and interest.

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

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

  • 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 types do the math for you and provide basic guidance.  You can simply do your federal return with these kinds. 
  • Utilize an internet tax preparation service or tax applications: Tax preparation software and online filing services are alternatives.  These choices are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are liberated.   The program asks you simple questions about your own life and financing to steer you through the completion of your forms.  
  • Get free, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free aid is typically limited based on income, and some services appeal to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including 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 alternative is likely to be the most costly one. 

    Employing online tax prep software is far and away the favored approach of the majority of taxpayers.  In fact, 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 could worry about security — particularly with so many data breaches.  But experts agree this is not a problem that should dissuade you from e-filing.

    “E-filing a tax return has proven to be an extremely 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 private information through an encrypted network as opposed to exposing your data in the email.”

    Dennis Chow, vice president of data security at SCIS Security, clarifies that the IRS has put security measures in place to keep your data secure.  “Trainers normally use IRS particular APIs that require token sessions,” Chow says.  “All of this is routed over TLS encrypted links “

    It is very important to use a trustworthy service to help you file your taxes.  Chow advises to not e-file on a computer or utilize an online connection which is not private.

    Bottom line

    For many taxpayers, it is sensible to e-file a yield 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 dependable source, so that you can ensure the information which you provide to transmit to the IRS is going to be kept protected.