Warren Buffett Compound Interest – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree about everything, but they’re largely on the same page in regards 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 as 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 don’t have 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 account.

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

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

  1. Quick affirmation your forms are received: The IRS will confirm a tax filing was received within 24 hours of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 
  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’ll receive your money in three weeks or less.  Choosing direct deposit can also speed up the refund process.

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

  4. Simple payment process: If you owe the IRS money, it is easier to pay at your convenience when you e-file.  You can submit returns early and pay afterwards if necessary, provided that you pay by 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. You also have the option to pay your balance by using 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 information: Submitting returns electronically means there is a digital copy of your tax records.  If something happens to your paperwork, you’ll have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and get those advantages — and the practice of doing this is easy.

How to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may have the ability to use the IRS Free File program. 
    2. Free File Fillable Forms — If your income is over $72,000 and you’re comfortable doing your earnings without any help, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer basic guidance.  You can only do your federal return with these forms. 
    3. Use an internet tax preparation service or tax 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 applications providers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and financing to guide you through the completion of your forms.  
    4. Get free, in-person tax aid: 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 services cater to specific demographic groups. 
    5. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are licensed IRS e-file providers. The IRS maintains a database of authorized providers, but be aware this alternative is very 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 tax returns to be submitted through tax return prep software.

      Is e-filing really stable?

      While e-filing is convenient, you could worry about safety — particularly with so many data breaches.  But experts agree that this isn’t an issue which should deter you from 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 direction, marketing and sales at LegalShield. “In fact, it may be more secure than paper filing as you’re sending your personal information through an encrypted system as opposed to exposing your data in the mail.”

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

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

      Bottom line

      For most taxpayers, it makes sense to e-file a yield 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 to use tax preparation software from a dependable source, so you may ensure the information you supply to transmit to the IRS is going to be kept secure.