Warren Buffett Lessons – 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 on everything, but they’re largely on precisely the same page in regards to e-filing individual income tax returns.

The majority of individual income tax returns submitted to the IRS are e-filed.  E-filing is a favorite because it’s a win-win for taxpayers and the IRS.

In return, you could get any refund you are owed faster, especially if you have it directly deposited to your bank account.

But what about safety?  And can digital filing actually give you access to all of the forms that you might need in case you have a complex tax situation?  Are there ever situations when you can not e-file?  Let us look at the advantages of e-filing, and if it may be the best filing option for your needs.

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

  1. Quick confirmation your forms are received: The IRS will confirm a tax filing was received within one day of digital submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived . 

    Timely refunds: When you publish a paper filing, it may take six to eight weeks to be given a tax refund.  With e-filing, you’ll get your money in three weeks or less.  Choosing direct deposit can also speed up the refund procedure.

  2. Reduced likelihood of mistakes: According to the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% rate of errors on paper filings.  The IRS also provides more information on problems discovered on e-filed returns compared with paper returns.

  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 later if needed, provided that you pay by 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 Immediate pay service from the checking or savings accounts, submitting a credit card through a payment processor for a commission, or paying by check or money order. 

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

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

The way to e-file a tax return?

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

    1. Use 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 forms do the math for you and provide basic advice.  You can simply do your federal return with these kinds. 
    3. Utilize an online tax preparation service or tax software: 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 apps, Some are free.   The program asks you simple questions about your life and finances to guide you through the completion of your forms.  
    4. Get free, in-person tax aid: In most states, you will find volunteers to help prepare and e-file returns.  However, eligibility for free aid is typically limited based on earnings, and some providers cater to particular demographic groups. 
    5. Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they’re licensed IRS e-file providers. The IRS maintains a database of authorized providers, but be aware this option is likely to be the most costly one. 

      Using online tax prep software is far and away the preferred approach of most taxpayers.  Actually, the IRS says it expected more than four tax returns to be filed through tax return prep program.

      Is e-filing really secure?

      While e-filing is convenient, you may be worried about safety — particularly with so many data breaches.  But experts agree that this isn’t a problem 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, marketing and revenue at LegalShield. “In actuality, 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 mail.”

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

      It is very important to use a trusted service that will help you file your taxes.  Chow advises to not e-file on a public computer or utilize an online connection that isn’t confidential.

      Bottom line

      For many taxpayers, it makes sense to e-file a return because it is the most convenient way to submit 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 you can make certain the information which you supply to transmit to the IRS will be kept secure.