Is e-filing a better way to record your taxes?
Americans and the IRS might not agree on everything, but they’re largely on 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’s a win-win for taxpayers and the IRS.
If you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. And in return, you can get any refund you are owed faster, particularly if you have it directly deposited to your bank account.
But what about safety? And can digital filing really provide you access to all the forms you may need if you have a intricate tax situation? Are there situations when you can’t e-file? Let’s look at the benefits of e-filing, and whether it might be the very best filing choice for your needs.
If you are thinking about e-filing, a Few of the advantages include:
- Quick affirmation your forms have been obtained: The IRS will affirm a tax filing was received within one day of electronic submission. For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived safely.
Timely refunds: When you publish a paper filing, it can take six to eight months to receive a tax refund. With e-filing, you’ll get your money in three weeks or not. Choosing direct deposit may also accelerate the refund procedure.
Reduced likelihood of mistakes: In accordance with the IRS, there’s around a 1% error rate on e-filed returns, compared with a 20% rate of mistakes on paper filings. The IRS also provides more information on issues discovered on e-filed returns compared with paper returns.
Simple payment procedure: If you owe the IRS money, it is simpler to pay at your convenience when you e-file. It’s possible to submit returns early and pay later if necessary, 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, 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 account or savings accounts, filing a credit card through a payment processor for a commission, or paying by check or money order. Just be aware delaying payment following the filing due date (typically April 15) can lead to penalties and interest.
Digital storage of tax information: Submitting returns electronically implies there is an electronic backup of your tax documents. So if something happens to your paperwork, you will have a digital backup.
The good news: Most taxpayers do opt to e-file and get those benefits — and the process of doing so is easy.
You have four choices for filing an electronically filed tax return to the IRS.
- Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you could be able to use the IRS Free File program.
- Free File Fillable Forms — If your income is over $72,000 and you’re comfortable doing your earnings without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer basic advice. You can simply do your federal return with these forms.
- Utilize an online tax preparation tax or service applications: Tax prep software and online filing services are alternatives. These options are an easy way to finish and e-file your own forms. Some software suppliers charge for their programs, Some are free. The program asks you simple questions about your life and financing to steer you through the completion of your forms.
- Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields. However, eligibility for free aid is typically limited based on earnings, and a few providers appeal to specific demographic groups.
- Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they are licensed IRS e-file providers. The IRS maintains a record of authorized providers, but be aware this option is very likely to be the most costly one.
Using online tax prep software is far and away the favored approach of the majority of taxpayers. In fact, the IRS says it expected over four tax returns to be submitted through tax return prep program.
Is e-filing really secure?
While e-filing is convenient, you could be worried about safety — particularly with so many data breaches. But experts agree this isn’t a problem that should deter you from e-filing.
“E-filing a tax return has proven to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product direction, marketing and sales at LegalShield. “In fact, it may be more secure than paper filing as you’re sending your personal information through an encrypted system as opposed to exposing your data in the email.”
Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has put security measures in place to keep your information secure. “Trainers normally use IRS specific APIs that require token sessions,” Chow says. “All of this is routed over TLS encrypted links “
It’s important to employ a trusted service to assist you record your taxes. Chow advises to not e-file on a public computer or utilize an online connection which isn’t private.
For most taxpayers, it makes sense to e-file a return because it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment options. Just make certain that you use tax preparation software from a dependable source, so that you may ensure the information which you provide to transmit to the IRS will be kept secure.