The Warren Buffett Way – Should I E-file My Taxes Online

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

Americans and the IRS may not agree on everything, but they are largely 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 because it is a win-win for taxpayers and the IRS.

In return, you can find any refund you are owed quicker, particularly if you have it directly deposited into your bank accounts.

However, what about security?  And can electronic filing actually provide you access to all the forms you might 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 best filing option for your requirements.

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

  1. Quick affirmation your forms are received: The IRS will affirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely. 

    Timely refunds: When you publish a paper filing, it may take six to eight months to receive a tax refund.  With e-filing, you’ll receive your money in 3 weeks or less.  Choosing direct deposit may also speed up the refund process.

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

  3. Simple payment process: If you owe the IRS money, it is easier to pay at your convenience if you e-file.  You can submit returns early and pay later if needed, as long as you pay by the April 15 filing deadline.  Additionally you have the choice to pay your balance by making use of the IRS Direct 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 result in penalties and interest.

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

The good news: Most taxpayers do decide to e-file and get those benefits — and the process of doing so is easy.

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you could be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is over $72,000 and you’re comfortable doing your taxes without any assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer basic advice.  You can only do your federal return with these kinds. 
    3. Use an online tax preparation tax or service software: Tax prep software and online filing services are options.  These choices are an easy way to finish and e-file your own forms.  Some software providers charge for their programs, Some are liberated.   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 returns.  But eligibility for free help is normally restricted based on income, and some services cater to particular demographic groups.  The IRS maintains a record of authorized providers, but be aware this alternative is 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 expected more than four tax returns to be filed through tax return prep software.

Is e-filing really stable?

While e-filing is suitable, you may worry about safety — particularly with so many data breaches.  But experts agree that this isn’t a problem which should deter you from e-filing.

“E-filing a tax return has turned out to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product leadership, 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 system rather than exposing your data 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 secure.  “Vendors typically utilize IRS particular APIs that need token sessions,” Chow says.  “All this is routed over TLS encrypted links “

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

Bottom line

For most taxpayers, it makes sense to e-file a yield 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 dependable source, so you can make certain the information which you provide to transmit to the IRS is going to be kept protected.