Dave Ramsey Foundations In Personal Finance Homeschool Edition – Is It Best To E-File My Taxes?

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

Americans and the IRS may not agree about everything, but they are mostly on the same page when it comes to e-filing individual income tax returns.

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

When you e-file your federal income tax return, you save the IRS money because its employees don’t have to spend time manually processing your return. And in return, you can find any refund you’re owed faster, especially if you have it directly deposited to your bank accounts.

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

If you’re Considering e-filing, a Few of the advantages include:

  1. Quick confirmation your forms are obtained: The IRS will confirm a tax filing has been received within one day of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 
  2. 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 are going to get your money in three weeks or not.  Choosing direct deposit can also accelerate the refund process.

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

  4. Simple payment procedure: If you owe the IRS money, it’s simpler to cover at your advantage if you e-file.  You can submit returns early and pay later if necessary, as long as you pay from the April 15 filing deadline.  And you’re able to schedule electronic funds transfers to easily send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. Additionally you have the choice to pay your balance by using the IRS Direct 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 after the filing due date (typically April 15) can lead to penalties and interest.

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

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

  • Free File Fillable Types — If your income is more than $72,000 and you’re comfortable doing your taxes without any help, you can use Free File Fillable Forms from the IRS. The forms do the math for you and offer standard guidance.  You can only do your federal return with all these forms. 
  • Utilize an internet tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These options are a simple way to complete and e-file your forms.  Some applications suppliers charge for their apps, Some are free.   The software asks you simple questions about your own life and financing to steer you through the completion of your types.  
  • Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields.  However, eligibility for free help is typically limited based on income, and a few services cater to particular demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older.  The IRS maintains a database of authorized providers, but 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.  Actually, the IRS says it anticipated more than four tax returns to be filed through tax return prep software.

    Is e-filing really stable?

    While e-filing is suitable, you could be worried about security — especially with all these data breaches.  But experts agree that this isn’t an issue that should dissuade you by e-filing.

    “E-filing a tax return has turned out to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In actuality, it can be more secure than paper filing as you’re sending your private information through an encrypted network rather than exposing your information in the email.”

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

    It’s important to use a trustworthy service to assist you record your taxes.  Chow advises to not e-file on a public computer or use an online connection which isn’t private.

    Bottom line

    For most taxpayers, it is sensible to e-file a yield 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 make certain that you use tax planning software from a trusted source, so that you can ensure the information you provide to transmit to the IRS will be kept secure.