Warren Buffett Indicator – Should I E-file My Taxes Online

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

Americans and the IRS may not agree about everything, but they’re mostly on precisely the exact same page when it comes to e-filing individual income tax returns.

Nearly all individual income tax returns submitted to the IRS are e-filed. 

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

But what about security?  And can digital filing actually give you access to all of the forms that you might 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 might be the very best filing choice for your needs.

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

  1. Quick affirmation your forms have been obtained: The IRS will affirm a tax filing was received within one day of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely. 

    Timely refunds: When you publish a paper filing, it may take six to eight months to receive a tax refund.  With e-filing, you’ll receive your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund procedure.

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

  3. Simple payment process: If you owe the IRS money, it is easier to pay at your advantage if you e-file.  You can submit returns early and pay afterwards if necessary, 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 making use of the IRS Direct pay service from the checking account or savings accounts, submitting a credit card through a payment processor for a fee, or paying by check or money order. 

  4. Digital storage of tax data: Submitting returns electronically means there’s an electronic backup of your tax records.  So if something happens to your paperwork, then you’ll have a digital backup.

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

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

  • Free File Fillable Types — If your income is more than $72,000 and you are comfortable doing your taxes without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide standard advice.  You can simply do your federal return with all these kinds. 
  • Utilize an internet tax preparation service or tax software: Tax preparation software and online filing services are options.  These choices are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are free.   The software asks you simple questions about your life and financing to steer you through the completion of your types.  
  • Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free help is typically limited based on income, and a few providers cater to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are authorized IRS e-file providers. The IRS maintains a record of authorized providers, but be aware this option 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 anticipated over four in five tax returns to be submitted through tax return prep program.

    Is e-filing really stable?

    While e-filing is convenient, you could worry about security — particularly with all these data breaches.  But experts agree this isn’t an issue which should dissuade you from e-filing.

    “E-filing a tax return has proven to be a very secure way to file your taxes,” says Scott Grissom, vice president of product direction, advertising and revenue at LegalShield. “In fact, it can be more secure than paper filing since you’re sending your personal information through an encrypted network as opposed to exposing your information in the email.”

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

    It’s important to use a trustworthy service to assist you record your taxes.  Chow advises not to e-file on a computer or use an online connection which is not private.

    Bottom line

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