Motley Fool Warren Buffett – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree about everything, but they’re largely on precisely the same page in regards to e-filing individual income tax returns.

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

And in return, you could get any refund you’re owed faster, especially if you have it directly deposited into your bank account.

However, what about safety?  And can digital filing actually provide you access to all of the forms that you may need if you have a complex tax situation?  Are there situations when you can not 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 are Considering e-filing, some of the advantages include:

  1. Quick affirmation your forms have been received: The IRS will affirm a tax filing was received within one day 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 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 less.  Choosing direct deposit can also speed up the refund process.

  2. Reduced likelihood of mistakes: In accordance with the IRS, there’s around 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 yields.

  3. Simple payment procedure: If you owe the IRS money, it is simpler to cover at your convenience if you e-file.  It’s possible to submit returns early and pay later if necessary, as long as you pay from the April 15 filing deadline.  You also have the option to pay your balance by making use of the IRS Direct pay service from your checking or savings accounts, submitting a credit card through a payment processor for a commission, or paying by check or money order. 

  4. Digital storage of taxation information: Submitting returns electronically means there’s an electronic backup of your tax documents.  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 advantages — and the process of doing so is simple.

The way to e-file a tax return?

    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. 
    2. Free File Fillable Forms — If your income is over $72,000 and you’re comfortable doing your taxes without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer basic advice.  You can simply do your federal return with all these kinds. 
    3. Use an online tax preparation service or tax 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 providers charge for their apps, Some are free.   The program asks you simple questions about your own life and financing to steer you through the completion of your forms.  
    4. Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free aid is typically limited based on income, and a few providers appeal to particular demographic groups.  The IRS maintains a record of authorized providers, but you should be aware this alternative is very likely to be the most costly one. 

Using online tax prep software is far and away the preferred 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 software.

Is e-filing really secure?

While e-filing is suitable, you could be worried about security — particularly with all these data breaches.  But experts agree that this isn’t an issue which should deter you by e-filing.

“E-filing a tax return has proven to be a very secure way to file your taxes,” says Scott Grissom, vice president of product direction, advertising and sales at LegalShield. “In fact, it can be more secure than paper filing since you’re sending your private 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 security measures in place to keep your data safe.  “Vendors typically utilize IRS particular APIs that require token sessions,” Chow says.  “All this can be routed over TLS encrypted connections”

It’s very important to use a trustworthy service that will assist you record your taxes.  Chow advises not to e-file on a public computer or utilize an online connection which is not confidential.

Bottom line

For many taxpayers, it makes sense to e-file a return because it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment options.  Just be certain that you use tax planning software from a dependable source, so you may ensure the information you provide to transmit to the IRS is going to be kept secure.