Warren Buffett Learn Accounting – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they are largely on the same page in regards to e-filing individual income tax returns.

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

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

But what about security?  And can electronic filing actually provide you access to all the forms that you might need if you have a intricate tax situation?  Are there situations when you can not e-file?  Let us look at the advantages of e-filing, and whether it might be the best filing choice for your needs.

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

  1. Quick affirmation your forms are received: The IRS will affirm a tax filing has been received within 24 hours of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 

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

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

  3. Easy payment process: If you owe the IRS money, it’s simpler to pay at your convenience if you e-file.  It’s possible to submit returns early and pay afterwards if needed, as long as you pay from the April 15 filing deadline.  Additionally you have the choice to pay your balance by making use of the IRS Direct pay service from the checking account or savings account, filing 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) can lead to interest and penalties.

  4. Digital storage of taxation data: Submitting returns electronically implies there is a digital copy of your tax documents.  If something happens to your paperwork, you will have an electronic backup.

The good news: Most taxpayers do decide to e-file and get those benefits — and the process of doing so is easy.

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

The forms do the math for you and offer standard advice.  You can simply do your federal return with all these kinds. 

  • Utilize an online tax preparation tax or service applications: Tax preparation software and online filing services are alternatives.  These options are a simple way to complete and e-file your own forms.  Some applications providers charge for their programs, Some are free.   The program asks you simple questions about your life and financing to steer 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 yields.  However, eligibility for free help is typically limited based on income, and a few services cater to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file yields for you if they’re licensed 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. 
  • Employing online tax preparation software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it anticipated more than four in five tax returns to be submitted through tax return prep software.

    Is e-filing really secure?

    While e-filing is suitable, you may be worried about security — particularly with so many data breaches.  But experts agree that this is not an issue which should dissuade you from e-filing.

    “E-filing a tax return has turned out to be a very secure way to file your taxes,” states 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 system rather than exposing your data in the email.”

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

    It is very important to employ a trusted service to assist you record your taxes.  Chow advises not to e-file on a computer or use an internet connection that is not private.

    Bottom line

    For many taxpayers, it is sensible to e-file a return because it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just be sure to use tax preparation software from a dependable source, so that you may ensure the information which you provide to transmit to the IRS is going to be kept secure.