Dave Ramsey Savings – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree about everything, but they’re largely on the same page in regards to e-filing individual income tax returns.

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

In return, you could find any refund you are owed faster, especially if you have it directly deposited to your bank account.

However, what about safety?  And can electronic filing really give you access to all the forms that you may need in case you have a complex tax situation?  Are there situations when you can not e-file?  Let’s look at the benefits of e-filing, and whether it may be the best filing option for your needs.

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

  1. Quick affirmation your forms have been received: The IRS will affirm a tax filing has been received within 24 hours of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 
  2. Timely refunds: When you submit a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you are going to get your money in 3 weeks or not.  Choosing direct deposit can also speed up the refund process.

  3. Reduced likelihood of mistakes: In accordance with the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more info on problems discovered on e-filed yields compared with paper returns.

  4. Simple payment process: If you owe the IRS money, it’s simpler to pay at your convenience when you e-file.  You can submit returns early and pay afterwards if necessary, as long as you pay by the April 15 filing deadline.  Additionally you have the option 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 fee, or paying by check or money order. 

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

The good news: Most taxpayers do decide to e-file and find those advantages — and the practice of doing this is easy.

The way to e-file a tax return?

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

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you could be able to use the IRS Free File program. 
    2. Free File Fillable Forms — If your income is more than $72,000 and you are comfortable doing your taxes without any help, you can use Free File Fillable Forms from the IRS. The forms do the math for you and offer standard advice.  You can only do your federal return with all these forms. 
    3. Use an internet tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These options are an easy way to finish and e-file your forms.  Some applications suppliers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and finances to steer you through the completion of your types.  
    4. Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free aid is normally restricted based on earnings, and a few providers cater to particular demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older.  The IRS maintains a database of licensed providers, but you should be aware this option is very 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 anticipated more than four tax returns to be filed through tax return prep program.

      Is e-filing really secure?

      While e-filing is suitable, you could worry about security — especially with all these data breaches.  But experts agree that this is not a problem which should deter you by e-filing.

      “E-filing a tax return has turned out to be a very secure way to file your taxes,” states Scott Grissom, vice president of product direction, advertising and revenue at LegalShield. “In actuality, it may be more secure than paper filing since 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, explains that the IRS has put security measures in place to keep your data safe.  “Vendors typically utilize IRS specific APIs that require token sessions,” Chow says.  “All of this is routed over TLS encrypted links “

      It is very important to employ a trusted service to assist you file your taxes.  Chow advises to not e-file on a computer or use an online connection which isn’t private.

      Bottom line

      For most taxpayers, it is sensible to e-file a yield since 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 sure to use tax preparation software from a trusted source, so you can make certain the information which you provide to transmit to the IRS is going to be kept secure.