Warren Buffett Business Principles – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they’re mostly on precisely the same page when it comes 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 is a win-win for taxpayers and the IRS.

When you e-file your federal income tax return, you conserve the IRS money because its workers don’t need to spend time manually processing your return. In return, you can get any refund you are owed quicker, particularly in the event that you have it directly deposited into your bank accounts.

But what about security?  And can digital filing really give you access to all the forms that you might need in case you’ve got a intricate tax situation?  Are there situations when you can’t e-file?  Let’s look at the advantages of e-filing, and whether it may 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 are obtained: The IRS will affirm a tax filing has been received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived safely. 
  2. Timely refunds: When you submit 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 less.  Choosing direct deposit may also accelerate the refund procedure.

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

  4. Easy payment process: If you owe the IRS money, it’s simpler to cover at your advantage when you e-file.  It’s possible to submit returns early and pay later if needed, provided that you pay from the April 15 filing deadline.  You also have the option to pay your balance by using the IRS Immediate pay service from your checking account or savings account, 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 tax data: Submitting returns electronically means there’s an electronic backup of your tax records.  If something happens to your paperwork, you will have an electronic backup.

The good news: Most taxpayers do opt to e-file and find those advantages — and the process of doing this is easy.

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you may be able to use the IRS Free File program.  The types do the math for you and offer standard advice.  You can only do your federal return with all these kinds. 
    2. Utilize an online tax preparation service or tax applications: Tax preparation software and online filing services are options.  These choices are a simple way to complete and e-file your own forms.  Some software providers charge for their apps, Some are liberated.   The software asks you simple questions about your life and financing to steer you through the completion of your types.  
    3. Get free, 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 providers appeal to specific demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older.  The IRS maintains a database of licensed providers, but be aware this alternative is very likely to be the most costly one. 

      Employing online tax prep software is far and away the favored approach of most taxpayers.  In fact, the IRS says it expected over four in five tax returns to be filed through tax return prep software.

      Is e-filing really secure?

      While e-filing is convenient, you could worry about security — especially with all these data breaches.  But experts agree this is not an issue that should dissuade you from e-filing.

      “In fact, it may be more secure than paper filing since you’re sending your private information through an encrypted network rather than exposing your data in the email.”

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

      It is important to employ a trusted service that will help you record your taxes.  Chow advises not to e-file on a computer or utilize an online connection that isn’t private.

      Bottom line

      For most taxpayers, it makes sense to e-file a return because it’s 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 that you use tax preparation software from a trusted source, so you can make certain the information which you supply to transmit to the IRS will be kept secure.