Dave Ramsey Live Radio – 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 on everything, but they’re mostly on the exact same page when it comes to e-filing individual income tax returns.

Nearly all individual income tax returns submitted to the IRS are e-filed. 

When you e-file your federal income tax return, you save the IRS cash because its workers don’t need to spend time manually processing your return. In return, you could get any refund you’re owed faster, especially in the event that you have it directly deposited into your bank account.

But what about security?  And can digital filing actually give you access to all of the forms that you might need in case you’ve got a complex tax situation?  Are there ever situations when you can not e-file?  Let’s look at the advantages of e-filing, and if it might be the very best filing choice for your requirements.

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

  1. Quick confirmation your forms have been obtained: The IRS will confirm 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 . 
  2. Timely refunds: When you publish a paper filing, it may take six to eight weeks to be given a tax refund.  With e-filing, you are going to receive your money in three weeks or less.  Choosing direct deposit may also accelerate the refund procedure.

  3. Reduced likelihood of errors: According to the IRS, there’s approximately a 1 percent error rate on e-filed yields, compared with a 20% rate of errors 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 simpler to cover at your advantage when you e-file.  It’s possible to submit returns early and pay afterwards if needed, as long as you pay from the April 15 filing deadline.  And you can 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 choice to pay your balance by using the IRS Direct pay service from your checking account or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order. 

  5. Digital storage of tax data: Submitting returns electronically means there’s a digital backup of your tax documents.  If something happens to your paperwork, you’ll have an electronic backup.

The good news: Most taxpayers do opt to e-file and get those benefits — and the process of doing this is simple.

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program.  The types do the math for you and offer standard guidance.  You can simply do your federal return with these kinds. 
    2. Utilize an online tax preparation tax or service software: Tax prep software and online filing services are alternatives.  These options are a simple way to complete and e-file your own forms.  Some applications providers charge for their apps, Some are liberated.   The program asks you simple questions about your life and finances to steer you through the completion of your forms.  
    3. Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free aid is normally restricted based on income, and some services appeal to specific demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older. 
    4. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they’re licensed IRS e-file providers. The IRS maintains a database of licensed providers, but be aware this option is very 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 anticipated over four tax returns to be submitted through tax return prep program.

Is e-filing really secure?

While e-filing is suitable, you could be worried about security — particularly with so many data breaches.  But experts agree that this isn’t an issue which should deter you by e-filing.

“E-filing a tax return has proven to be a very secure way to file your taxes,” says Scott Grissom, vice president of product leadership, advertising and revenue at LegalShield. “In actuality, it can be more secure than paper filing as you’re sending your personal 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 the IRS has put security measures in place to keep your information secure.  “Trainers normally use IRS particular APIs that require token sessions,” Chow says.  “All of this can be routed over TLS encrypted links “

It’s important to employ a trusted service that will help you record your taxes.  Chow advises not to e-file on a computer or utilize an online connection that is not private.

Bottom line

For many taxpayers, it is sensible to e-file a return 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 dependable source, so you can make certain the information which you provide to transmit to the IRS is going to be kept secure.