Dave Ramsey Legacy Box – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree on everything, but they are mostly on precisely the exact 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 a favorite as it is a win-win for taxpayers and the IRS.

In return, you can get any refund you are owed quicker, particularly in the event that you have it directly deposited to your bank account.

However, what about security?  And can electronic filing really provide you access to all of the forms you might need if you have a intricate tax situation?  Are there ever situations when you can not e-file?  Let’s look at the advantages of e-filing, and whether it might be the best filing option for your requirements.

If you’re Considering 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 24 hours of electronic submission.  For paper filers, the IRS does not 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 are going to get your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund process.

  2. Reduced likelihood of errors: According to the IRS, there’s around a 1% error rate on e-filed returns, compared with a 20% speed of errors 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 easier to cover at your advantage when 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 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 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 result in penalties and interest.

  4. Digital storage of tax data: Submitting returns electronically means there is a digital backup of your tax records.  So if something happens to your paperwork, then you’ll have a digital backup.

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

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

  • Free File Fillable Types — If your income is over $72,000 and you’re 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 standard guidance.  You can only do your federal return with these kinds. 
  • Utilize an internet 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 own forms.  Some software providers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and finances to steer 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 yields.  But eligibility for free help is typically limited based on income, and some providers appeal to specific demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older. 
  • 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 database of licensed providers, but you should 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 the majority of taxpayers.  In fact, the IRS says it expected more than four in five tax returns to be submitted through tax return prep software.

    Is e-filing really secure?

    While e-filing is convenient, you could be worried about safety — especially with so many data breaches.  But experts agree that this is not an issue which should dissuade you from e-filing.

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

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

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

    Bottom line

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