Dave Ramsey Financial Snapshot – 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 about everything, but they’re largely on precisely the same page when it comes to e-filing individual income tax returns.

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

And in return, you could find any refund you’re owed quicker, particularly if you have it directly deposited to your bank accounts.

But what about security?  And can digital filing actually provide you access to all of the forms that you may need if 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 whether it might be the best filing choice for your requirements.

If you’re 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 has been received within one day 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 weeks to be given a tax refund.  With e-filing, you are going to receive your money in 3 weeks or not.  Choosing direct deposit can also speed up the refund process.

  3. Reduced chance of mistakes: According to the IRS, there is approximately a 1 percent error rate on e-filed returns, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more information 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 if you e-file.  You can submit returns early and pay later if necessary, 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. You also have the choice to pay your balance by making use of the IRS Direct pay service from your checking 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 following the filing due date (typically April 15) can result in interest and penalties.

  5. Digital storage of taxation information: 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 decide to e-file and find those benefits — and the practice of doing so is easy.

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

  • Free File Fillable Forms — If your income is more than $72,000 and you are comfortable doing your taxes without help, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide basic guidance.  You can only do your federal return with all these kinds. 
  • Use an online 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 suppliers 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 types.  
  • Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free help is typically limited based on income, and a few services cater to particular demographic groups.  For instance, 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 likely to be the most costly one. 

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

    Is e-filing really secure?

    While e-filing is suitable, you could worry about security — particularly with so many data breaches.  But experts agree this is not an issue that should deter you from e-filing.

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

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

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

    Bottom line

    For many 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 effortless payment choices.  Just be certain that you use tax planning software from a dependable source, so that you may make certain the information which you supply to transmit to the IRS will be kept secure.