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

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

Americans and the IRS may not agree about everything, but they are mostly on the same page in regards to e-filing individual income tax returns.

The majority of individual income tax returns submitted to the IRS are e-filed. 

And in return, you can find any refund you’re owed faster, especially if you have it directly deposited to your bank accounts.

But what about security?  And can digital filing really provide you access to all the forms that you may need if you have a complex tax situation?  Are there ever situations when you can not e-file?  Let us look at the benefits of e-filing, and whether it might be the very best filing option for your requirements.

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 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 publish a paper filing, it can take six to eight weeks to be given a tax refund.  With e-filing, you are going to get your money in three weeks or less.  Choosing direct deposit may also speed up the refund procedure.

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

  3. Simple payment process: If you owe the IRS money, it is simpler to pay at your convenience when 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 send the IRS what you owe on a date of your choosing — again, provided that 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.  Just be aware delaying payment after the filing due date (typically April 15) will lead to penalties and interest.

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

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

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you could be able to use the IRS Free File program.  The forms do the math for you and provide basic guidance.  You can simply do your federal return with all these forms. 
    2. Utilize an online tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These choices are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are free.   The program asks you simple questions about your life and financing to steer you through the completion of your forms.  
    3. Get complimentary, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free help is typically limited based on earnings, and a few services appeal to specific demographic groups.  By way of instance, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older.  The IRS maintains a database of licensed 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 preferred approach of the majority of taxpayers.  In fact, the IRS says it expected over four in five tax returns to be filed through tax return prep program.

Is e-filing really secure?

While e-filing is suitable, you may be worried about security — especially with so many data breaches.  But experts agree that this is not a problem that should dissuade you from e-filing.

“In actuality, it can be more secure than paper filing as you’re sending your personal information through an encrypted system as opposed to exposing your data in the mail.”

Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has set safety measures in place to keep your data secure.  “Vendors typically utilize IRS specific APIs that require token sessions,” Chow says.  “All this is routed over TLS encrypted connections.”

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

Bottom line

For most taxpayers, it makes sense to e-file a return 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 dependable source, so you may make certain the information which you provide to transmit to the IRS is going to be kept secure.