Is e-filing really a better way to record your taxes?
Americans and the IRS may not agree about everything, but they are largely on the exact 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.
When you e-file your federal income tax return, you conserve the IRS cash because its employees don’t need to spend time manually processing your return. And in return, you can get any refund you are owed quicker, particularly if you have it directly deposited into your bank account.
But what about safety? And can digital filing actually provide you access to all the forms that you might need in case you have a complex tax situation? Are there situations when you can’t e-file? Let’s look at the advantages of e-filing, and whether it may be the best filing choice for your needs.
If you’re thinking about e-filing, some of the advantages include:
- Quick confirmation your forms have been received: The IRS will affirm a tax filing has been received within one day of electronic submission. For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely.
Timely refunds: When you submit a paper filing, it can take six to eight months to receive a tax refund. With e-filing, you’ll get your money in three weeks or less. Choosing direct deposit can also speed up the refund procedure.
Reduced chance of mistakes: According to the IRS, there’s around a 1 percent 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 returns compared with paper yields.
Simple payment process: If you owe the IRS money, it’s easier to pay at your advantage when you e-file. It’s possible to submit returns early and pay later if necessary, as long as you pay by the April 15 filing deadline. And you can 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. You also have the option to pay your balance by making use of the IRS Immediate pay service from your 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) can lead to penalties and interest.
Digital storage of tax information: Submitting returns electronically means there is a digital copy of your tax records. If something happens to your paperwork, then you’ll have a digital backup.
The fantastic news: Most taxpayers do opt to e-file and get those advantages — and the process of doing this is simple.
You have four options for filing an electronically filed tax return to the IRS.
- Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you could have the ability to use the IRS Free File program. The forms do the math for you and provide standard guidance. You can only do your federal return with all these kinds.
- Utilize an online tax preparation tax or service applications: Tax prep software and online filing services are alternatives. These options are an easy way to complete and e-file your own forms. Some applications providers charge for their apps, Some are free. The software asks you simple questions about your life and financing to guide you through the completion of your forms.
- Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns. However, eligibility for free aid is normally restricted based on earnings, and a few providers cater to specific demographic groups. By way of example, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older.
- 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 be aware this alternative is very likely to be the most costly one.
Using online tax preparation software is far and away the favored approach of the majority of taxpayers. In fact, the IRS says it anticipated more than four tax returns to be submitted through tax return prep program.
Is e-filing really secure?
While e-filing is convenient, you may be worried about safety — especially with all these data breaches. But experts agree that this is not an issue which should dissuade you by 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 sales at LegalShield. “In fact, 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 the IRS has set safety measures in place to keep your data safe. “Trainers normally use IRS specific APIs that need token sessions,” Chow says. “All of this is routed over TLS encrypted links .”
It’s very important to employ a trustworthy service to help you file your taxes. Chow advises to not e-file on a computer or use an internet connection that is not confidential.
For most taxpayers, it makes sense to e-file a return because 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 make certain that you use tax preparation software from a dependable source, so that you may ensure the information which you provide to transmit to the IRS will be kept protected.