Peter Lynch Value – Is It Best To E-File My Taxes?

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

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

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

When you e-file your federal income tax return, you save the IRS cash because its workers do not have to spend time manually processing your return. And in return, you could get any refund you are owed quicker, particularly if you have it directly deposited to your bank accounts.

However, what about safety?  And can electronic filing actually give you access to all the forms that you might need if you’ve got a complex tax situation?  Are there ever situations when you can not e-file?  Let us look at the advantages of e-filing, and whether it may be the best filing choice for your needs.

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

  1. Quick affirmation your forms are obtained: The IRS will confirm a tax filing has been received within one day of digital submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived . 
  2. 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 3 weeks or not.  Choosing direct deposit may also accelerate the refund procedure.

  3. Reduced likelihood of errors: According to the IRS, there is 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 issues discovered on e-filed returns compared with paper yields.

  4. Easy payment procedure: If you owe the IRS money, it’s easier to pay at your advantage if you e-file.  You can submit returns early and pay afterwards if necessary, provided that you pay from the April 15 filing deadline.  Additionally you have the choice to pay your balance by using the IRS Immediate pay service from the checking or savings accounts, filing a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) can lead to interest and penalties.

  5. Digital storage of taxation data: Submitting returns electronically means there is an electronic backup of your tax records.  So if something happens to your paperwork, then you will have an electronic backup.

The fantastic news: Most taxpayers do decide to e-file and get those benefits — and the practice of doing this is easy.

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you could have the ability to use the IRS Free File program.  The forms do the math for you and provide basic guidance.  You can only do your federal return with all these kinds. 
    2. Use an internet tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These options are an easy way to complete and e-file your forms.  Some software providers charge for their programs, Some are liberated.   The program asks you simple questions about your life and financing to guide you through the completion of your forms.  
    3. Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields.  However, eligibility for free aid is normally restricted based on income, and a few providers cater to particular demographic groups. 
    4. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they’re licensed IRS e-file providers. 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 preparation software is far and away the preferred approach of the majority of taxpayers.  Actually, the IRS says it expected over four tax returns to be submitted 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 this is not a problem that should dissuade you by e-filing.

“In actuality, it can be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your information in the mail.”

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

It is very important to employ a trustworthy service that will help you record your taxes.  Chow advises not to e-file on a public computer or use an internet connection that is not private.

Bottom line

For many taxpayers, it is sensible to e-file a return because it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just be sure that you 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 protected.