Dave Ramsey Foundation – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree about everything, but they are mostly on 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. 

If you e-file your federal income tax return, you conserve the IRS money because its workers do not need to spend time manually processing your return. And in return, you could find 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 provide you access to all the forms you might need in case you have a complex tax situation?  Are there ever situations when you can’t e-file?  Let us look at the benefits of e-filing, and if it may be the best filing choice for your requirements.

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

  1. Quick affirmation your forms have been obtained: The IRS will confirm 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. 

    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’ll receive your money in 3 weeks or less.  Choosing direct deposit can also accelerate the refund process.

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

  3. Easy payment procedure: If you owe the IRS money, it is easier to cover at your convenience if you e-file.  It’s possible to submit returns early and pay afterwards if needed, as long as you pay by the April 15 filing deadline.  And you’re able to schedule electronic money transfers to 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 using the IRS Immediate pay service from your 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 following the filing due date (typically April 15) can lead to penalties and interest.

  4. Digital storage of tax data: Submitting returns electronically implies there is a digital copy of your tax documents.  So if something happens to your paperwork, you will have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and find those advantages — and the process of doing so is easy.

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you could be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is more than $72,000 and you’re comfortable doing your taxes without help, you can use Free File Fillable Forms from the IRS. The forms do the math for you and provide basic advice.  You can simply do your federal return with these forms. 
    3. Use an online tax preparation service or tax applications: Tax preparation software and online filing services are options.  These options are a simple way to finish and e-file your forms.  Some software providers charge for their apps, Some are liberated.   The program asks you simple questions about your own life and financing to guide you through the completion of your forms.  
    4. Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields.  However, eligibility for free aid is typically limited based on earnings, and a few services appeal to particular demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older. 
    5. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are licensed IRS e-file providers. The IRS maintains a record of authorized providers, but be aware this option is likely to be the most costly one. 

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

Is e-filing really secure?

While e-filing is suitable, you could worry about safety — especially with so many data breaches.  But experts agree that this isn’t an issue that should deter you by e-filing.

“In actuality, it can be more secure than paper filing since you’re sending your personal information through an encrypted system rather than exposing your information in the email.”

Dennis Chow, vice president of data security at SCIS Security, explains the IRS has set security measures in place to keep your data safe.  “Trainers normally use IRS specific APIs that need token sessions,” Chow says.  “All of this is routed over TLS encrypted connections.”

It is important to employ a trusted service to help you file your taxes.  Chow advises to not e-file on a computer or use an internet connection which isn’t private.

Bottom line

For many taxpayers, it makes sense to e-file a yield since it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just be certain that you use tax preparation software from a trusted source, so you can make certain the information which you supply to transmit to the IRS will be kept secure.