Warren Buffett 2018 Annual Letter – What to Consider When Filing My Taxes Online

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

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

The majority of 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.

If you e-file your federal income tax return, you save the IRS money because its workers do not need to spend time manually processing your return. And in return, you can get any refund you are owed quicker, especially if you have it directly deposited into your bank account.

But what about security?  And can electronic filing really give you access to all the forms you may need in case you have a intricate tax situation?  Are there ever situations when you can’t e-file?  Let us look at the advantages of e-filing, and if it might be the very best filing choice for your needs.

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

  1. Quick affirmation your forms have been 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 your forms have arrived . 
  2. Timely refunds: When you publish a paper filing, it may take six to eight weeks to receive a tax refund.  With e-filing, you are going to get your money in three weeks or not.  Choosing direct deposit can also accelerate the refund process.

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

  4. Simple payment procedure: If you owe the IRS money, it is simpler to cover at your advantage when you e-file.  You can submit returns early and pay later if necessary, provided that you pay from the April 15 filing deadline.  And you can schedule electronic money 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 option to pay your balance by making use of the IRS Direct pay service from the checking or savings accounts, filing a credit card through a payment processor for a fee, or paying by check or money order. 

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

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

How to e-file a tax return?

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

    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 offer standard guidance.  You can only do your federal return with all these kinds. 
    2. Utilize an online tax preparation service or tax software: Tax prep software and online filing services are options.  These options are a simple way to finish and e-file your own forms.  Some applications suppliers charge for their apps, Some are free.   The program asks you simple questions about your own life and financing to guide you through the completion of your types.  
    3. Get free, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free aid is normally restricted based on earnings, and some services cater to specific 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 prep software is far and away the preferred approach of the majority of taxpayers.  In fact, 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 suitable, you could worry about security — especially with so many data breaches.  But experts agree that this is not an issue which should dissuade you by 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, advertising and revenue at LegalShield. “In actuality, it may be more secure than paper filing as you’re sending your personal information through an encrypted network rather than exposing your information in the email.”

      Dennis Chow, vice president of data security at SCIS Security, clarifies that the IRS has put safety measures in place to keep your information safe.  “Trainers normally use IRS specific APIs that need token sessions,” Chow says.  “All of this can be routed over TLS encrypted links “

      It is important to use a trusted service to help you record your taxes.  Chow advises to not e-file on a public computer or use an internet connection which isn’t private.

      Bottom line

      For most taxpayers, it makes sense to e-file a yield since 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 be certain to use tax preparation software from a dependable source, so that you may make certain the information you supply to transmit to the IRS will be kept protected.