Warren Buffett Annual Letter – Should I E-file My Taxes Online

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

Americans and the IRS may not agree on everything, but they are mostly 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. 

In return, you can get any refund you’re owed quicker, particularly if you have it directly deposited to your bank accounts.

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

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

  1. Quick affirmation 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 doesn’t send any acknowledgment that your forms have arrived . 

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

  2. Reduced likelihood of mistakes: According to the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more info on problems discovered on e-filed yields compared with paper yields.

  3. Simple payment procedure: If you owe the IRS money, it’s simpler to pay at your advantage if you e-file.  It’s possible to submit returns early and pay later if needed, as long as you pay from 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 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.

  4. Digital storage of taxation data: Submitting returns electronically means there is a digital copy of your tax records.  So if something happens to your paperwork, you will have a digital backup.

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

How to e-file a tax return?

You have four options for submitting 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 could be able to use the IRS Free File program.  The forms do the math for you and provide basic guidance.  You can only do your federal return with these forms. 
    2. Use an online tax preparation service or tax software: Tax prep software and online filing services are options.  These choices are a simple way to complete and e-file your forms.  Some software suppliers charge for their apps, Some are free.   The program asks you simple questions about your life and financing to steer you through the completion of your forms.  
    3. Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on earnings, and a few providers appeal to particular demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older. 
    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 be aware this option is likely to be the most costly one. 

      Using online tax preparation software is far and away the favored 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 suitable, you may be worried about safety — particularly with so many data breaches.  But experts agree that this is not a problem which should deter you by e-filing.

      “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 information in the email.”

      Dennis Chow, vice president of information security at SCIS Security, explains that the IRS has set security measures in place to keep your data safe.  “Trainers normally use IRS particular APIs that require ab sessions,” Chow says.  “All of this is routed over TLS encrypted links “

      It’s very important to employ a trusted service to assist you record your taxes.  Chow advises to not e-file on a computer or utilize an internet connection which is not private.

      Bottom line

      For many taxpayers, it makes sense to e-file a return since it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just make certain that you use tax planning software from a trusted source, so you may make certain the information which you supply to transmit to the IRS will be kept protected.