Warren Buffett Investing Book – Should I E-file 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 when it comes to e-filing individual income tax returns.

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

When you e-file your federal income tax return, you save the IRS cash because its workers do not have to spend time manually processing your return. In return, you can get any refund you’re owed faster, especially if you have it directly deposited into your bank accounts.

But what about security?  And can electronic filing actually give you access to all the forms that you may need in case you’ve got a intricate tax situation?  Are there situations when you can not e-file?  Let us 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, a Few of the advantages include:

  1. Quick confirmation your forms have been received: The IRS will affirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS does not 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 are going to get your money in 3 weeks or less.  Choosing direct deposit may also speed up the refund procedure.

  2. Reduced likelihood of errors: According to the IRS, there’s approximately a 1 percent 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 returns.

  3. Simple payment procedure: If you owe the IRS money, it is easier to pay at your convenience when you e-file.  It’s possible to submit returns early and pay afterwards if necessary, provided that you pay from the April 15 filing deadline.  And you can schedule electronic money 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 choice to pay your balance by making use of the IRS Direct pay service from the checking or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order. 

  4. Digital storage of tax information: Submitting returns electronically implies there’s an electronic copy of your tax records.  So if something happens to your paperwork, you will have a digital backup.

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

How to e-file a tax return?

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

The types do the math for you and provide basic guidance.  You can simply do your federal return with all these forms. 

  • Utilize an internet tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These choices are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are liberated.   The software asks you simple questions about your life and financing to guide you through the completion of your types.  
  • Get free, in-person tax aid: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free help is normally restricted based on income, and a few providers appeal to specific demographic groups.  By way of example, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older.  The IRS maintains a database of authorized providers, but you should be aware this alternative 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.  Actually, the IRS says it expected over four tax returns to be submitted through tax return prep software.

    Is e-filing really secure?

    While e-filing is suitable, you may worry about security — especially with so many data breaches.  But experts agree that this isn’t an issue which should deter you by e-filing.

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

    Dennis Chow, vice president of data security at SCIS Security, clarifies the IRS has put security measures in place to keep your data safe.  “Vendors typically utilize IRS particular APIs that require token sessions,” Chow says.  “All of this can be routed over TLS encrypted connections.”

    It’s important to use a trusted service that will assist you file your taxes.  Chow advises to not e-file on a public computer or use an online connection which is not confidential.

    Bottom line

    For most taxpayers, it is sensible to e-file a yield since it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment options.  Just make sure to use tax preparation software from a trusted source, so that you can ensure the information which you provide to transmit to the IRS will be kept protected.