Is e-filing a better way to record your taxes?
Americans and the IRS might not agree on everything, but they’re largely on the same page in regards to e-filing individual income tax returns.
Nearly all individual income tax returns filed to the IRS are e-filed.
If you e-file your federal income tax return, you conserve the IRS cash because its workers do not need to spend time manually processing your return. And in return, you could find any refund you are owed faster, particularly in the event that you have it directly deposited into your bank account.
However, what about safety? And can electronic filing actually give you access to all of the forms you might need in case you’ve got a complex tax situation? Are there situations when you can not e-file? Let us look at the advantages of e-filing, and if it might be the best filing option for your needs.
If you are Considering e-filing, a Few of the advantages include:
- Quick affirmation your forms are obtained: The IRS will confirm a tax filing has been received within 24 hours of electronic submission. For paper filers, the IRS does not send any acknowledgment your forms have arrived safely.
Timely refunds: When you publish a paper filing, it may take six to eight weeks to be given a tax refund. With e-filing, you’ll receive your money in 3 weeks or less. Choosing direct deposit may also speed up the refund process.
Reduced likelihood of errors: In accordance with the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% rate of mistakes on paper filings. The IRS also provides more information on issues discovered on e-filed yields compared with paper yields.
Simple payment process: If you owe the IRS money, it’s simpler to cover at your convenience when you e-file. You can submit returns early and pay afterwards if necessary, as long as you pay from the April 15 filing deadline. And you can schedule electronic money 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 choice to pay your balance by using the IRS Direct pay service from the checking account or savings account, filing 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 result in interest and penalties.
Digital storage of tax information: Submitting returns electronically implies there is an electronic backup of your tax documents. So if something happens to your paperwork, you will have a digital backup.
The fantastic news: Most taxpayers do opt to e-file and get those benefits — and the practice of doing so is simple.
- Utilize IRS Free File: If your adjusted gross income is $72,000 or less you could be able to use the IRS Free File program.
- Free File Fillable Forms — If your income is over $72,000 and you are comfortable doing your earnings without help, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide standard guidance. You can only do your federal return with these forms.
- Utilize an online tax preparation tax or service applications: Tax prep software and online filing services are alternatives. These options are a simple way to complete and e-file your own forms. Some applications suppliers charge for their programs, Some are free. The software asks you simple questions about your own life and finances to guide you through the completion of your types.
- Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns. However, eligibility for free help is typically limited based on earnings, and a few providers cater to particular demographic groups. For example, 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 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 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. Actually, the IRS says it anticipated over four tax returns to be submitted through tax return prep program.
Is e-filing really secure?
While e-filing is convenient, you could worry about security — particularly with all these data breaches. But experts agree this isn’t a problem that should deter you from e-filing.
“In fact, it may 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, clarifies that the IRS has set safety measures in place to keep your data safe. “Trainers normally use IRS specific APIs that require token sessions,” Chow says. “All of this can be routed over TLS encrypted connections.”
It’s important to employ a trustworthy service that will help you record your taxes. Chow advises to not e-file on a public computer or use an online connection which is not confidential.
For most taxpayers, it is sensible to e-file a yield because it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment choices. Just be sure to use tax planning software from a dependable source, so that you can ensure the information which you provide to transmit to the IRS will be kept secure.