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

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

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

If you e-file your federal income tax return, you save the IRS cash because its workers do not need to spend time manually processing your return. And in return, you could get any refund you are owed faster, particularly if you have it directly deposited to your bank account.

However, what about safety?  And can electronic filing actually give you access to all the forms that you might need in case you’ve got a complex tax situation?  Are there ever situations when you can not e-file?  Let’s look at the advantages of e-filing, and if it might be the very best filing choice for your requirements.

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

  1. Quick affirmation your forms are received: The IRS will confirm a tax filing was received within one day of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived safely. 

    Timely refunds: When you publish a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you’ll receive your money in three weeks or not.  Choosing direct deposit can also accelerate the refund procedure.

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

  3. Simple payment process: If you owe the IRS money, it is easier to pay at your convenience if 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 choice to pay your balance by making use of the IRS Direct pay service from your checking account or savings account, submitting a credit card through a payment processor for a fee, or paying by check or money order. 

  4. Digital storage of tax data: Submitting returns electronically means there is a digital copy of your tax documents.  So if something happens to your paperwork, then you will have a digital backup.

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

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program.  The forms do the math for you and offer standard advice.  You can only do your federal return with these kinds. 
    2. Use an internet tax preparation service or tax software: Tax preparation software and online filing services are alternatives.  These choices are an easy way to complete and e-file your own forms.  Some software suppliers charge for their programs, Some are liberated.   The program asks you simple questions about your own life and finances to guide you through the completion of your types.  
    3. Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free help is typically limited based on income, and some services cater to specific demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older. 
    4. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they’re licensed IRS e-file providers. The IRS maintains a record of licensed providers, but you should be aware this alternative is likely to be the most costly one. 

      Employing online tax prep software is far and away the preferred approach of most taxpayers.  In fact, the IRS says it anticipated over four in five tax returns to be submitted through tax return prep program.

      Is e-filing really secure?

      While e-filing is suitable, you may be worried about safety — especially with so many data breaches.  But experts agree that this isn’t an issue which should deter you from e-filing.

      “E-filing a tax return has turned out to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product leadership, advertising and revenue at LegalShield. “In fact, it may be more secure than paper filing as you’re sending your private information through an encrypted system as opposed to exposing your information in the email.”

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

      It is important to employ a trusted service to assist you record your taxes.  Chow advises to not e-file on a public computer or utilize an internet connection which is not confidential.

      Bottom line

      For many taxpayers, it makes sense to e-file a return because it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just make sure that you use tax preparation software from a trusted source, so you can ensure the information which you supply to transmit to the IRS will be kept secure.