Dave Ramsey Smart Investor – 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 on everything, but they’re mostly 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 is a win-win for taxpayers and the IRS.

And in return, you could get any refund you are owed quicker, particularly if you have it directly deposited to your bank account.

But what about security?  And can electronic filing actually give you access to all of the forms that you may need in case 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 best filing option for your needs.

If you are thinking about e-filing, a Few of the advantages include:

  1. Quick affirmation your forms are received: The IRS will confirm a tax filing has been received within 24 hours of digital submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived . 

    Timely refunds: When you submit a paper filing, it can 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 may also speed up the refund procedure.

  2. Reduced chance of mistakes: According to the IRS, there is around a 1 percent error rate on e-filed yields, compared with a 20% speed of errors on paper filings.  The IRS also provides more info on problems discovered on e-filed returns compared with paper yields.

  3. Simple payment process: If you owe the IRS money, it is easier to cover at your advantage if 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 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. Additionally you have the option to pay your balance by using the IRS Immediate 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. 

  4. Digital storage of taxation data: Submitting returns electronically implies there is an electronic copy of your tax documents.  So if something happens to your paperwork, you will have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and get those benefits — and the practice of doing so is easy.

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

The types do the math for you and offer basic guidance.  You can simply do your federal return with all these forms. 

  • Utilize an online tax preparation service or tax applications: Tax preparation software and online filing services are alternatives.  These options are an easy way to finish and e-file your forms.  Some applications providers charge for their programs, Some are free.   The software asks you simple questions about your own life and financing to guide you through the completion of your forms.  
  • Get complimentary, in-person tax help: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on income, and some services cater to particular demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they’re authorized IRS e-file providers. The IRS maintains a database of authorized providers, but be aware this option is very likely to be the most costly one. 
  • Using online tax preparation software is far and away the preferred 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 stable?

    While e-filing is convenient, you may worry about safety — especially with so many data breaches.  But experts agree that this is not a problem which should dissuade you by e-filing.

    “In actuality, it can 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 that the IRS has set security measures in place to keep your information safe.  “Vendors typically utilize IRS specific APIs that require ab sessions,” Chow says.  “All of this can be routed over TLS encrypted connections”

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

    Bottom line

    For many taxpayers, it is sensible to e-file a yield because it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just make certain to use tax preparation software from a dependable source, so you may ensure the information which you provide to transmit to the IRS is going to be kept protected.