How Does Warren Buffett Invest – What to Consider When Filing My Taxes Online

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

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

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

And in return, you could get any refund you are owed quicker, especially in the event that you have it directly deposited to your bank account.

But what about security?  And can digital filing actually provide you access to all of the forms you might need in case you have a complex tax situation?  Are there ever situations when you can’t e-file?  Let’s look at the benefits of e-filing, and if it might be the very best filing choice for your requirements.

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

  1. Quick affirmation your forms have been 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 that your forms have arrived safely. 
  2. 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 not.  Choosing direct deposit may also speed up the refund process.

  3. Reduced chance of mistakes: According to the IRS, there’s approximately a 1% error rate on e-filed returns, 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.

  4. Easy payment process: If you owe the IRS money, it’s simpler to pay at your advantage when you e-file.  You can submit returns early and pay afterwards if needed, provided that 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 or savings accounts, filing a credit card through a payment processor for a fee, or paying by check or money order.  Just be aware delaying payment following the filing due date (typically April 15) will lead to penalties and interest.

  5. Digital storage of tax information: Submitting returns electronically means there is an electronic copy of your tax documents.  If something happens to your paperwork, you will have a digital backup.

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

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

The forms do the math for you and provide basic advice.  You can only do your federal return with these kinds. 

  • Use an online tax preparation tax or service software: Tax prep software and online filing services are alternatives.  These options are a simple way to complete and e-file your forms.  Some software suppliers charge for their programs, Some are liberated.   The software asks you simple questions about your life and finances to steer you through the completion of your types.  
  • Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  However, eligibility for free aid is typically limited based on earnings, and a few providers appeal to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file yields for you if they are authorized IRS e-file providers. 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.  Actually, the IRS says it expected more than four in five tax returns to be filed through tax return prep software.

    Is e-filing really stable?

    While e-filing is suitable, you could worry about safety — especially with all these data breaches.  But experts agree that this isn’t an issue that should deter 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 direction, advertising and sales at LegalShield. “In actuality, it may be more secure than paper filing as you’re sending your private information through an encrypted network rather than exposing your data in the mail.”

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

    It is important to use 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 that isn’t private.

    Bottom line

    For most taxpayers, it is sensible to e-file a return since it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just be certain to use tax planning software from a trusted source, so that you can ensure the information you supply to transmit to the IRS will be kept secure.