Warren Buffett American Express – 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 precisely 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’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 employees do not need to spend time manually processing your return. In return, you can get any refund you are owed quicker, especially in the event that you have it directly deposited into your bank accounts.

But what about safety?  And can digital filing really give you access to all of the forms you may need if you’ve got a complex tax situation?  Are there situations when you can’t e-file?  Let us look at the advantages of e-filing, and whether it might be the best filing choice for your needs.

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

  1. Quick confirmation your forms are received: The IRS will confirm a tax filing has been received within 24 hours of electronic submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived safely. 
  2. Timely refunds: When you submit a paper filing, it can take six to eight months to be given a tax refund.  With e-filing, you are going to get your money in 3 weeks or less.  Choosing direct deposit may also speed up the refund procedure.

  3. Reduced chance of mistakes: In accordance with the IRS, there is around a 1% error rate on e-filed returns, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more info on issues discovered on e-filed returns compared with paper returns.

  4. Easy payment procedure: If you owe the IRS money, it’s simpler to cover at your convenience if you e-file.  You can submit returns early and pay afterwards if needed, provided that you pay by the April 15 filing deadline.  Additionally you have the choice to pay your balance by using the IRS Immediate pay service from your checking account or savings accounts, submitting a credit card through a payment processor for a fee, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) will lead to penalties and interest.

  5. Digital storage of taxation data: Submitting returns electronically means there’s an electronic copy of your tax documents.  If something happens to your paperwork, then you will have an electronic backup.

The good news: Most taxpayers do opt to e-file and get those advantages — and the process of doing so is simple.

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you could be able to use the IRS Free File program.  The types do the math for you and offer basic advice.  You can only do your federal return with these forms. 
    2. Use an online tax preparation tax or service software: Tax prep software and online filing services are alternatives.  These choices are a simple way to complete and e-file your own forms.  Some software providers charge for their programs, Some are free.   The software asks you simple questions about your own life and financing to steer you through the completion of your forms.  
    3. 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 typically limited based on income, and a few services appeal to particular demographic groups. 
    4. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they are authorized IRS e-file providers. The IRS maintains a record 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 favored approach of most taxpayers.  Actually, the IRS says it expected more than four tax returns to be filed through tax return prep program.

      Is e-filing really stable?

      While e-filing is suitable, you could be worried about security — especially with all these data breaches.  But experts agree this is not a problem that should dissuade you by e-filing.

      “In fact, it can be more secure than paper filing since you’re sending your personal information through an encrypted system as opposed to exposing your data in the email.”

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

      It is important to employ a trustworthy service to assist you file your taxes.  Chow advises not to e-file on a public computer or utilize an internet connection that is not confidential.

      Bottom line

      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 easy payment choices.  Just be certain that you use tax planning software from a trusted source, so that you can ensure the information you supply to transmit to the IRS will be kept secure.