Suze Orman Retirement Guide – Is It Best To E-File My Taxes?

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

Americans and the IRS might not agree about everything, but they’re largely 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.  E-filing is a favorite as it’s a win-win for taxpayers and the IRS.

If you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. In return, you could find any refund you’re owed quicker, especially if you have it directly deposited to your bank account.

But what about security?  And can digital filing actually give you access to all of the forms you may need if you have a intricate tax situation?  Are there situations when you can not e-file?  Let’s look at the benefits of e-filing, and if it may be the very best filing choice for your requirements.

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

  1. Quick confirmation your forms are obtained: The IRS will affirm a tax filing was received within 24 hours of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived . 

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

  2. Reduced chance of errors: According to the IRS, there is around a 1 percent error rate on e-filed yields, compared with a 20% rate of mistakes on paper filings.  The IRS also provides more information on problems discovered on e-filed yields compared with paper yields.

  3. Simple payment procedure: If you owe the IRS money, it is simpler to pay at your convenience if you e-file.  It’s possible to 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 send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. Additionally you have the choice to pay your balance by making use of the IRS Direct pay service from the checking or savings account, submitting 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 result in interest and penalties.

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

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

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

    1. Use 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 forms do the math for you and provide basic guidance.  You can simply do your federal return with all these forms. 
    2. Utilize an internet tax preparation tax or service applications: Tax prep software and online filing services are options.  These choices 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 own 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 returns.  But eligibility for free aid is typically limited based on earnings, and a few providers cater to particular demographic groups.  The IRS maintains a record of authorized 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 anticipated more than four tax returns to be filed through tax return prep software.

Is e-filing really secure?

While e-filing is suitable, you may be worried about safety — especially with all these data breaches.  But experts agree that this isn’t an issue that should deter you from 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, marketing and sales at LegalShield. “In actuality, it may be more secure than paper filing since you’re sending your private information through an encrypted system as opposed to exposing your information in the email.”

Dennis Chow, vice president of information security at SCIS Security, explains the IRS has put safety measures in place to keep your information secure.  “Trainers normally use IRS particular APIs that require token sessions,” Chow says.  “All of this can be routed over TLS encrypted connections.”

It is important to use a trustworthy service to help you record your taxes.  Chow advises to not e-file on a public computer or use an online connection which is not private.

Bottom line

For many taxpayers, it is sensible to e-file a yield because it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just be certain to use tax preparation software from a trusted source, so you may ensure the information which you provide to transmit to the IRS will be kept protected.