Dave Ramsey Small Business Accounting – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they’re mostly on the exact 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. 

When you e-file your federal income tax return, you save the IRS money because its employees don’t need to spend time manually processing your return. In return, you could find any refund you’re owed faster, particularly in the event that you have it directly deposited into your bank accounts.

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

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

  1. Quick affirmation your forms are obtained: The IRS will confirm a tax filing was received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived safely. 
  2. Timely refunds: When you publish a paper filing, it can take six to eight months to be given a tax refund.  With e-filing, you’ll get your money in 3 weeks or less.  Choosing direct deposit can also speed up the refund procedure.

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

  4. Simple payment process: If you owe the IRS money, it’s easier to cover at your advantage when you e-file.  You can submit returns early and pay later if necessary, provided that you pay by the April 15 filing deadline.  Additionally you have the option to pay your balance by using the IRS Immediate 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 after the filing due date (typically April 15) will lead to penalties and interest.

  5. Digital storage of taxation information: Submitting returns electronically means there is a digital copy of your tax records.  If something happens to your paperwork, then you’ll have a digital backup.

The good news: Most taxpayers do opt to e-file and find those advantages — and the process of doing so is simple.

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

  • Free File Fillable Types — If your income is over $72,000 and you are comfortable doing your taxes without any assistance, 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 these kinds. 
  • Use an internet tax preparation tax or service software: Tax preparation software and online filing services are alternatives.  These choices are a simple way to complete and e-file your own forms.  Some applications providers charge for their programs, Some are free.   The program asks you simple questions about your own life and financing to steer you through the completion of your types.  
  • Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free help is typically limited based on earnings, and some services appeal to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they are authorized IRS e-file providers. The IRS maintains a database of authorized providers, but you should be aware this alternative is likely to be the most costly one. 
  • Employing online tax preparation software is far and away the favored approach of the majority of taxpayers.  Actually, the IRS says it anticipated more than four tax returns to be submitted through tax return prep program.

    Is e-filing really stable?

    While e-filing is suitable, you could worry about security — particularly with all these data breaches.  But experts agree this is not a problem which should dissuade you from 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 direction, advertising and sales at LegalShield. “In fact, it can be more secure than paper filing as you’re sending your private information through an encrypted system rather than exposing your data in the email.”

    Dennis Chow, vice president of information security at SCIS Security, clarifies that the IRS has set safety measures in place to keep your information secure.  “Trainers normally use IRS particular APIs that require ab sessions,” Chow says.  “All this can be routed over TLS encrypted connections.”

    It’s important to use a trustworthy service to help you file your taxes.  Chow advises to not e-file on a public computer or use an internet connection that is not confidential.

    Bottom line

    For most taxpayers, it is sensible to e-file a yield because it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just make sure to use tax preparation software from a trusted source, so that you can make certain the information you supply to transmit to the IRS will be kept protected.