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

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

Americans and the IRS might not agree about everything, but they’re largely on precisely the exact same page in regards to e-filing individual income tax returns.

Nearly all individual income tax returns submitted to the IRS are e-filed.  E-filing is a favorite as it’s a win-win for taxpayers and the IRS.

When you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. And in return, you can find any refund you are owed quicker, especially if you have it directly deposited into your bank account.

But what about security?  And can digital filing actually give you access to all of the forms you may need if you have a complex tax situation?  Are there situations when you can’t e-file?  Let’s look at the benefits of e-filing, and if 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 confirmation 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 does not send any acknowledgment that your forms have arrived safely. 

    Timely refunds: When you submit a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you’ll receive your money in 3 weeks or not.  Choosing direct deposit can also accelerate the refund procedure.

  2. Reduced likelihood of mistakes: According to the IRS, there’s approximately a 1% error rate on e-filed returns, compared with a 20% rate 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’s simpler to cover at your convenience if you e-file.  It’s possible to submit returns early and pay afterwards if necessary, as long as you pay from the April 15 filing deadline.  And you’re able to schedule electronic funds transfers to easily send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. You also have the option to pay your balance by making use of the IRS Direct pay service from your checking account or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order. 

  4. Digital storage of tax data: Submitting returns electronically implies there’s a digital backup of your tax records.  If something happens to your paperwork, you will have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and find those benefits — and the practice of doing this is simple.

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

The forms do the math for you and provide standard advice.  You can simply do your federal return with these forms. 

  • Utilize an online tax preparation tax or service applications: Tax preparation software and online filing services are options.  These choices are an easy way to complete and e-file your own forms.  Some applications providers charge for their apps, Some are liberated.   The software asks you simple questions about your life and finances to guide you through the completion of your types.  
  • Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on income, and some providers cater to specific demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are authorized IRS e-file providers. The IRS maintains a record of licensed providers, but you should be aware this option is likely to be the most costly one. 

    Employing online tax prep software is far and away the preferred approach of most taxpayers.  Actually, 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 could be worried about security — particularly with all these data breaches.  But experts agree that this is not a problem that should dissuade you from e-filing.

    “E-filing a tax return has turned out to be a very secure way to file your taxes,” states Scott Grissom, vice president of product leadership, advertising and revenue at LegalShield. “In fact, it can be more secure than paper filing as you’re sending your private information through an encrypted network 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 safety measures in place to keep your information secure.  “Vendors typically utilize IRS particular APIs that require token sessions,” Chow says.  “All this is routed over TLS encrypted connections”

    It’s important to employ a trustworthy service that will assist you file your taxes.  Chow advises to not e-file on a computer or use an internet connection that isn’t confidential.

    Bottom line

    For most taxpayers, it makes sense 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 easy payment choices.  Just make sure that you use tax preparation software from a trusted source, so you may ensure the information you supply to transmit to the IRS is going to be kept protected.