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

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

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

Nearly all individual income tax returns filed to the IRS are e-filed. 

When you e-file your federal income tax return, you conserve the IRS money because its employees do not have to spend time manually processing your return. And in return, you can find any refund you are owed quicker, particularly in the event that you have it directly deposited into your bank accounts.

However, what about security?  And can electronic filing actually give you access to all of the forms that you might need if you have a complex tax situation?  Are there situations when you can not e-file?  Let us look at the benefits of e-filing, and whether it might be the best filing option for your needs.

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

  1. Quick affirmation your forms have been obtained: The IRS will confirm a tax filing was received within one day of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 

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

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

  3. Easy payment procedure: If you owe the IRS money, it’s simpler to cover at your convenience if you e-file.  You can submit returns early and pay later if necessary, provided that you pay by the April 15 filing deadline.  You also have the choice to pay your balance by making use of the IRS Direct pay service from your checking account or savings accounts, filing a credit card through a payment processor for a fee, or paying by check or money order. 

  4. Digital storage of taxation information: Submitting returns electronically means there’s an electronic copy of your tax documents.  So if something happens to your paperwork, then you will have a digital backup.

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

How to e-file a tax return?

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

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you may be able to use the IRS Free File program.  The types do the math for you and provide standard guidance.  You can only do your federal return with these forms. 
    2. Use an internet tax preparation tax or service applications: Tax prep software and online filing services are alternatives.  These choices are a simple way to complete and e-file your own forms.  Some software providers charge for their apps, Some are liberated.   The program asks you simple questions about your life and financing to steer you through the completion of your forms.  
    3. Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free help is normally restricted based on earnings, and a few services cater to specific demographic groups.  The IRS maintains a database of licensed providers, but you should be aware this alternative is likely to be the most costly one. 

      Using online tax prep software is far and away the preferred approach of most taxpayers.  In fact, the IRS says it expected more than four 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 all these data breaches.  But experts agree that this isn’t an issue that should dissuade you from e-filing.

      “E-filing a tax return has turned out to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In fact, it may be more secure than paper filing as you’re sending your private information through an encrypted system as opposed to exposing your information in the email.”

      Dennis Chow, vice president of data security at SCIS Security, clarifies 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 links .”

      It’s very important to employ a trusted service to assist you file your taxes.  Chow advises not to e-file on a computer or use an online connection that isn’t private.

      Bottom line

      For many taxpayers, it makes sense to e-file a yield since it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment options.  Just be sure to use tax preparation software from a dependable source, so you may ensure the information which you supply to transmit to the IRS is going to be kept secure.