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

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

Americans and the IRS might not agree on everything, but they are mostly on precisely the exact same page when it comes to e-filing individual income tax returns.

Nearly all individual income tax returns submitted to the IRS are e-filed. 

When 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 get any refund you are owed quicker, especially if you have it directly deposited to your bank accounts.

But what about safety?  And can electronic filing actually provide you access to all of the forms that you may need if you’ve got a intricate tax situation?  Are there ever situations when you can not e-file?  Let us look at the benefits of e-filing, and if it may be the very best filing choice for your needs.

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

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

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

  4. Easy payment procedure: If you owe the IRS money, it is easier to cover at your advantage if you e-file.  You can submit returns early and pay afterwards if needed, as long as you pay from the April 15 filing deadline.  You also have the choice 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 following the filing due date (typically April 15) can result in interest and penalties.

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

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

How to e-file a tax return?

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 not as you may be able to use the IRS Free File program.  The types do the math for you and offer standard guidance.  You can simply do your federal return with all these forms. 
    2. Use an internet tax preparation service or tax applications: Tax prep software and online filing services are options.  These options are an easy way to complete and e-file your forms.  Some software providers charge for their apps, Some are liberated.   The program asks you simple questions about your own life and finances to steer you through the completion of your forms.  
    3. Get free, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on earnings, and some services appeal to particular demographic groups.  The IRS maintains a record of licensed providers, but be aware this option is very 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 expected more than four tax returns to be filed through tax return prep software.

Is e-filing really stable?

While e-filing is suitable, you may worry about security — especially with so many data breaches.  But experts agree that this isn’t an issue that should dissuade you by e-filing.

“E-filing a tax return has turned out to be a very secure way to file your taxes,” says Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In actuality, it can be more secure than paper filing since 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, clarifies the IRS has set safety measures in place to keep your data safe.  “Vendors typically utilize IRS particular APIs that require token sessions,” Chow says.  “All this can be routed over TLS encrypted connections”

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

Bottom line

For many taxpayers, it makes sense 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 effortless payment choices.  Just be certain that you use tax planning software from a trusted source, so you can ensure the information which you provide to transmit to the IRS will be kept secure.