Dave Ramsey Personal Umbrella Policy – Is It Best To E-File My Taxes?

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

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

The majority of individual income tax returns filed to the IRS are e-filed.  E-filing is a favorite as it is a win-win for taxpayers and the IRS.

If you e-file your federal income tax return, you conserve the IRS cash because its employees do not need to spend time manually processing your return. In return, you could get any refund you are owed quicker, particularly if you have it directly deposited to your bank accounts.

But what about safety?  And can electronic filing actually provide you access to all the forms you might need if you’ve got a complex tax situation?  Are there situations when you can’t e-file?  Let’s look at the advantages of e-filing, and if it might be the very best filing option for your requirements.

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

  1. Quick confirmation your forms are obtained: The IRS will confirm a tax filing was received within one day of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived . 

    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 receive your money in 3 weeks or less.  Choosing direct deposit can also speed up the refund procedure.

  2. Reduced likelihood of errors: According to the IRS, there’s approximately a 1% error rate on e-filed yields, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more information on problems discovered on e-filed returns compared with paper returns.

  3. Simple payment procedure: If you owe the IRS money, it’s easier to cover at your advantage if you e-file.  You can submit returns early and pay afterwards if needed, provided that you pay from 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. Additionally you have the choice to pay your balance by making use of the IRS Direct pay service from your checking account or savings accounts, submitting 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 taxation data: Submitting returns electronically implies there is an electronic backup of your tax documents.  So if something happens to your paperwork, you’ll have a digital backup.

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

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

The forms do the math for you and offer basic advice.  You can simply do your federal return with all these kinds. 

  • Use an internet tax preparation service or tax applications: Tax preparation software and online filing services are options.  These choices are an easy way to finish and e-file your forms.  Some applications providers charge for their apps, Some are free.   The software asks you simple questions about your own life and finances to guide you through the completion of your forms.  
  • Get free, 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 some services 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.  The IRS maintains a record of licensed providers, but you should 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.  In fact, the IRS says it expected more than four in five tax returns to be filed through tax return prep program.

    Is e-filing really stable?

    While e-filing is suitable, you may be worried about safety — particularly with so many data breaches.  But experts agree this isn’t a problem which should dissuade you from e-filing.

    “E-filing a tax return has proven to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product leadership, advertising and revenue at LegalShield. “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 data 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 secure.  “Trainers normally use IRS specific APIs that need ab sessions,” Chow says.  “All of this can be routed over TLS encrypted connections”

    It’s very important to use a trusted service that will help you record your taxes.  Chow advises to not e-file on a public computer or utilize 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 file your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just be sure to use tax planning software from a trusted source, so you can make certain the information which you supply to transmit to the IRS is going to be kept protected.