Warren Buffett Casa – 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 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.  E-filing is a favorite because it’s a win-win for taxpayers and the IRS.

And in return, you could find any refund you are owed quicker, especially in the event that you have it directly deposited into your bank account.

However, what about security?  And can electronic filing really give you access to all the forms you might need if you’ve got a complex tax situation?  Are there ever situations when you can’t e-file?  Let’s look at the advantages of e-filing, and whether it might be the very best filing option for your needs.

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

  1. Quick affirmation your forms are obtained: The IRS will confirm 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 . 

    Timely refunds: When you submit a paper filing, it may take six to eight months to receive a tax refund.  With e-filing, you’ll get your money in three weeks or not.  Choosing direct deposit may also accelerate the refund procedure.

  2. Reduced likelihood of errors: According to the IRS, there is approximately a 1% error rate on e-filed yields, compared with a 20% rate of mistakes on paper filings.  The IRS also provides more info on issues discovered on e-filed yields compared with paper yields.

  3. Simple payment process: If you owe the IRS money, it’s easier to cover at your convenience when you e-file.  It’s possible to submit returns early and pay later if needed, as long as you pay by the April 15 filing deadline.  And you can schedule electronic funds transfers to easily send the IRS what you owe on a date of your choosing — again, as long as the IRS receives your payment by Tax Day. You also have the option to pay your balance by making use of the IRS Immediate pay service from the checking or savings account, submitting a credit card through a payment processor for a commission, or paying by check or money order. 

  4. Digital storage of taxation information: Submitting returns electronically implies there is an electronic copy of your tax documents.  So if something happens to your paperwork, then you will have an electronic backup.

The fantastic news: Most taxpayers do decide to e-file and find those advantages — and the practice of doing so is simple.

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

The types do the math for you and offer standard guidance.  You can only do your federal return with these forms. 

  • Use an online tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These options are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are free.   The program asks you simple questions about your own life and financing to steer you through the completion of your forms.  
  • Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free aid is typically limited based on earnings, and a few providers cater to specific demographic groups. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they are authorized IRS e-file providers. The IRS maintains a database of authorized providers, but you should be aware this option is likely to be the most costly one. 
  • Employing 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 submitted through tax return prep program.

    Is e-filing really secure?

    While e-filing is suitable, you could worry about security — particularly with all these data breaches.  But experts agree this is not an issue which should deter you by e-filing.

    “E-filing a tax return has turned out to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product leadership, advertising and revenue at LegalShield. “In actuality, it can be more secure than paper filing since you’re sending your private information through an encrypted network as opposed to exposing your data in the mail.”

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

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

    Bottom line

    For most taxpayers, it makes sense to e-file a yield since it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just make certain to use tax preparation software from a trusted source, so that you can make certain the information you supply to transmit to the IRS is going to be kept protected.