Is e-filing really a better way to record your taxes?
Americans and the IRS may not agree about everything, but they’re mostly on the 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. E-filing is popular as it’s a win-win for taxpayers and the IRS.
When you e-file your federal income tax return, you conserve the IRS cash because its employees do not need to spend time manually processing your return. 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 digital filing actually provide you access to all of the forms you may need if you have a intricate tax situation? Are there ever situations when you can’t e-file? Let us look at the benefits of e-filing, and if it might be the best filing choice for your needs.
If you are Considering e-filing, some of the advantages include:
- Quick confirmation your forms are obtained: The IRS will confirm a tax filing has been 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 submit a paper filing, it can take six to eight months to receive a tax refund. With e-filing, you’ll receive your money in three weeks or not. Choosing direct deposit can also speed up the refund process.
Reduced chance of mistakes: In accordance with the IRS, there is approximately a 1% error rate on e-filed yields, compared with a 20% rate of mistakes on paper filings. The IRS also provides more info on issues discovered on e-filed returns compared with paper returns.
Simple payment procedure: If you owe the IRS money, it is easier to pay at your advantage when you e-file. You can submit returns early and pay later if needed, as long as you pay by the April 15 filing deadline. And you can schedule electronic funds transfers to easily 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 choice to pay your balance by making use of the IRS Immediate pay service from your checking account or savings account, filing a credit card through a payment processor for a commission, 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.
Digital storage of taxation information: Submitting returns electronically means there’s an electronic backup of your tax records. So if something happens to your paperwork, then you will have a digital backup.
The good news: Most taxpayers do decide to e-file and find those benefits — and the practice of doing this is simple.
You have four choices for submitting an electronically filed tax return to the IRS.
- 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.
- Free File Fillable Types — If your income is more than $72,000 and you are comfortable doing your earnings without assistance, you can use Free File Fillable Forms from the IRS. The forms do the math for you and offer standard guidance. You can simply do your federal return with these forms.
- Use an online tax preparation service or tax applications: Tax preparation software and online filing services are alternatives. These options are a simple way to finish and e-file your forms. Some applications providers 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 free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields. However, eligibility for free help is normally restricted based on earnings, and a few services appeal 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, such as CPAs, can e-file yields for you if they are licensed IRS e-file providers. The IRS maintains a database of authorized providers, but be aware this alternative is very likely to be the most costly one.
Employing online tax prep software is far and away the favored 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 secure?
While e-filing is convenient, you may be worried about security — particularly with all these data breaches. But experts agree this isn’t an issue that 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 leadership, advertising and revenue 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 mail.”
Dennis Chow, vice president of information security at SCIS Security, clarifies that the IRS has put security measures in place to keep your information safe. “Vendors typically utilize IRS particular APIs that need token sessions,” Chow says. “All this can be routed over TLS encrypted connections”
It is important to employ a trusted service that will assist you record your taxes. Chow advises not to e-file on a computer or utilize an online connection that is not private.
For many taxpayers, it makes sense to e-file a return because it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment options. Just make certain to use tax planning software from a trusted source, so that you may make certain the information which you supply to transmit to the IRS is going to be kept protected.