The Intelligent Investor Warren Buffett – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree on everything, but they are mostly on the exact same page in regards to e-filing individual income tax returns.

The majority of individual income tax returns submitted 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 conserve the IRS cash because its workers do not need to spend time manually processing your return. In return, you can get any refund you’re owed quicker, particularly in the event that you have it directly deposited to your bank accounts.

But what about security?  And can digital filing really provide you access to all of the forms that you may need if you’ve got a complex tax situation?  Are there situations when you can not e-file?  Let’s look at the advantages of e-filing, and if it may be the best filing choice for your requirements.

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

  1. Quick confirmation your forms have been 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 that your forms have arrived safely. 

    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 three weeks or less.  Choosing direct deposit can also speed up the refund procedure.

  2. Reduced likelihood of errors: According to the IRS, there’s 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.

  3. Easy payment procedure: If you owe the IRS money, it is simpler to pay at your advantage when you e-file.  You can submit returns early and pay later if necessary, as long as you pay by the April 15 filing deadline.  You also have the option 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) can lead to interest and penalties.

  4. Digital storage of taxation data: Submitting returns electronically implies there’s a digital backup of your tax documents.  If something happens to your paperwork, you’ll have an electronic backup.

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

The way to e-file a tax return?

The forms do the math for you and offer basic guidance.  You can only do your federal return with all these kinds. 

  • Utilize an online tax preparation tax or service software: Tax preparation software and online filing services are alternatives.  These options are a simple way to finish and e-file your forms.  Some software providers charge for their apps, Some are liberated.   The program asks you simple questions about your own life and finances to steer you through the completion of your forms.  
  • Get free, in-person tax help: In most states, you can find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on income, and a few providers appeal to specific demographic groups.  By way of instance, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older.  The IRS maintains a record of licensed providers, but you should be aware this alternative is very likely to be the most costly one. 
  • Employing online tax prep software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it anticipated more than four in five tax returns to be filed through tax return prep program.

    Is e-filing really stable?

    While e-filing is convenient, you could worry about security — especially with all these data breaches.  But experts agree this isn’t a problem which should deter you by e-filing.

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

    Dennis Chow, vice president of data security at SCIS Security, explains the IRS has set safety measures in place to keep your information secure.  “Vendors typically utilize IRS particular APIs that need token sessions,” Chow says.  “All of this is routed over TLS encrypted connections.”

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

    Bottom line

    For most taxpayers, it makes sense to e-file a yield because it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just be certain to use tax preparation software from a trusted source, so you may make certain the information you supply to transmit to the IRS is going to be kept secure.