Dave Ramsey Second Home – Is It Best To E-File My Taxes?

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

Americans and the IRS may not agree on everything, but they are largely on the exact 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 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 have to spend time manually processing your return. In return, you can find any refund you are owed quicker, especially if you have it directly deposited into your bank accounts.

However, what about security?  And can electronic filing actually provide you access to all of the forms you may need if you have a complex tax situation?  Are there situations when you can not e-file?  Let us look at the benefits of e-filing, and whether it may be the best filing choice for your requirements.

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

  1. Quick confirmation your forms have been obtained: The IRS will affirm a tax filing has been received within one day of digital submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived . 

    Timely refunds: When you publish a paper filing, it may take six to eight months to be given a tax refund.  With e-filing, you are going to receive your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund procedure.

  2. Reduced chance of errors: In accordance with the IRS, there is around a 1% error rate on e-filed yields, 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 yields.

  3. Easy payment process: If you owe the IRS money, it is simpler to cover at your convenience if you e-file.  You can submit returns early and pay later if necessary, as long as you pay from the April 15 filing deadline.  You also have the choice to pay your balance by making use of the IRS Direct pay service from the 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 following the filing due date (typically April 15) will result in penalties and interest.

  4. Digital storage of taxation information: Submitting returns electronically implies there is 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 opt to e-file and get those benefits — and the process of doing this is simple.

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

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you may 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 assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer standard guidance.  You can only do your federal return with all these forms. 
    3. Use an internet tax preparation service or tax software: Tax preparation software and online filing services are alternatives.  These options are an easy way to complete and e-file your forms.  Some software suppliers charge for their programs, Some are free.   The program asks you simple questions about your life and finances to guide 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.  But eligibility for free help is normally restricted based on income, and some services cater to specific demographic groups.  The IRS maintains a record of authorized providers, but be aware this alternative is very likely to be the most costly one. 

Using online tax preparation software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it expected over four tax returns to be submitted through tax return prep software.

Is e-filing really secure?

While e-filing is convenient, you may worry about security — particularly with all these data breaches.  But experts agree that this is not 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 system as opposed to exposing your information in the mail.”

Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has set safety measures in place to keep your information secure.  “Trainers normally use IRS specific APIs that need token sessions,” Chow says.  “All this is routed over TLS encrypted connections.”

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

Bottom line

For many taxpayers, it is sensible to e-file a return 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 certain to use tax preparation software from a dependable source, so you may make certain the information you provide to transmit to the IRS will be kept protected.