Dave Ramsey Monthly Cash Flow Plan – 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 about everything, but they are largely on precisely the same page in regards to e-filing individual income tax returns.

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

If you e-file your federal income tax return, you save the IRS money because its workers don’t need to spend time manually processing your return. And in return, you can find any refund you’re owed faster, particularly in the event that you have it directly deposited into your bank account.

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

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

  1. Quick confirmation 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 . 
  2. Timely refunds: When you publish a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you’ll get your money in three 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% 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 returns compared with paper yields.

  4. Easy payment process: If you owe the IRS money, it’s easier to pay at your convenience if 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 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 option to pay your balance by making use of the IRS Immediate pay service from your checking account 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) will lead to interest and penalties.

  5. Digital storage of tax data: Submitting returns electronically implies there’s an electronic backup of your tax records.  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 get those advantages — and the process of doing this is simple.

The way to e-file a tax return?

You have four options for submitting an electronically filed tax return to the IRS.

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you may have the ability to use the IRS Free File program.  The forms do the math for you and provide standard guidance.  You can simply do your federal return with all these forms. 
    2. Use an internet tax preparation service or tax software: Tax prep software and online filing services are options.  These options are an easy way to complete and e-file your own forms.  Some software suppliers charge for their programs, Some are free.   The software asks you simple questions about your own life and financing to guide you through the completion of your forms.  
    3. Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free help is typically limited based on earnings, and some services appeal to specific demographic groups. 
    4. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they’re licensed IRS e-file providers. The IRS maintains a record of authorized providers, but you should be aware this option is very likely to be the most costly one. 

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

Is e-filing really stable?

While e-filing is convenient, you could worry about safety — especially with all these data breaches.  But experts agree this isn’t an issue that should dissuade you from e-filing.

“In actuality, it may 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 information security at SCIS Security, clarifies that the IRS has put safety measures in place to keep your information secure.  “Vendors typically utilize IRS specific APIs that need token sessions,” Chow says.  “All of this is routed over TLS encrypted connections.”

It’s very important to use a trustworthy service that will assist you record your taxes.  Chow advises to not e-file on a computer or utilize an online connection which is not private.

Bottom line

For most taxpayers, it makes sense to e-file a return because it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just be sure to use tax preparation software from a trusted source, so you may make certain the information you supply to transmit to the IRS is going to be kept protected.