Is e-filing a much better way to record your taxes?
Americans and the IRS may not agree on everything, but they’re largely on the same page when it comes to e-filing individual income tax returns.
Nearly all individual income tax returns filed to the IRS are e-filed. E-filing is popular because it’s a win-win for taxpayers and the IRS.
If you e-file your federal income tax return, you conserve the IRS money because its employees do not need to spend time manually processing your return. And in return, you can find any refund you are owed quicker, especially if you have it directly deposited into your bank account.
However, what about security? And can digital filing actually give you access to all the forms that you may need if you’ve got a complex tax situation? Are there situations when you can’t e-file? Let us look at the advantages of e-filing, and if it might be the best filing option for your requirements.
If you are thinking about e-filing, some of the advantages include:
- Quick affirmation your forms are obtained: The IRS will confirm a tax filing has been received within one day of digital submission. For paper filers, the IRS doesn’t send any acknowledgment 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 receive your money in three weeks or not. Choosing direct deposit can also accelerate the refund process.
Reduced likelihood of mistakes: According to the IRS, there’s 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 yields compared with paper yields.
Easy payment procedure: If you owe the IRS money, it is simpler to pay at your convenience when you e-file. You can submit returns early and pay afterwards if needed, as long as you pay from the April 15 filing deadline. And you’re able to schedule electronic funds 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. You also have the choice to pay your balance by using the IRS Immediate pay service from your checking account or savings account, submitting a credit card through a payment processor for a commission, or paying by check or money order.
Digital storage of taxation information: Submitting returns electronically means there is an electronic backup of your tax records. So if something happens to your paperwork, then you’ll have a digital backup.
The good news: Most taxpayers do decide to e-file and find those advantages — and the process of doing so is simple.
- Use 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 are comfortable doing your earnings without help, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide basic advice. You can only do your federal return with all these kinds.
- Utilize an internet tax preparation tax or service software: Tax prep software and online filing services are alternatives. These options are a simple way to finish and e-file your forms. Some software suppliers charge for their apps, Some are free. The program asks you simple questions about your life and finances to guide 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. But eligibility for free aid is typically limited based on earnings, and some providers appeal to specific demographic groups.
- Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are licensed IRS e-file providers. The IRS maintains a database of licensed providers, but be aware this option is likely to be the most costly one.
Employing online tax prep software is far and away the preferred approach of the majority of taxpayers. In fact, the IRS says it expected over four tax returns to be filed through tax return prep software.
Is e-filing really stable?
While e-filing is convenient, you may worry about security — especially with all these data breaches. But experts agree this isn’t an issue which should dissuade you by e-filing.
“E-filing a tax return has turned out to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In actuality, it may be more secure than paper filing as you’re sending your private 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 the IRS has set security measures in place to keep your information safe. “Trainers normally use 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 to assist you record your taxes. Chow advises to not e-file on a computer or use an internet connection which is not private.
For many taxpayers, it makes sense to e-file a yield since it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment choices. Just be sure that you use tax planning software from a trusted source, so that you can ensure the information you supply to transmit to the IRS is going to be kept protected.