Warren Buffett March Madness 2015 – 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 on everything, but they are mostly on the exact 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.  E-filing is popular because it is a win-win for taxpayers and the IRS.

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

However, what about security?  And can electronic filing actually give you access to all of the forms you might need in case you have a complex tax situation?  Are there situations when you can not e-file?  Let’s look at the advantages of e-filing, and whether it may be the best filing choice for your needs.

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

  1. Quick confirmation your forms are obtained: The IRS will confirm a tax filing has been received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived safely. 
  2. Timely refunds: When you submit a paper filing, it may take six to eight months to be given a tax refund.  With e-filing, you are going to receive your money in three weeks or less.  Choosing direct deposit can also speed up the refund process.

  3. Reduced chance of errors: According to the IRS, there’s approximately a 1% 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 yields.

  4. Simple payment process: If you owe the IRS money, it’s simpler to pay at your convenience when you e-file.  It’s possible to submit returns early and pay later if needed, as long as you pay by the April 15 filing deadline.  And you can schedule electronic funds 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. Additionally you have the option to pay your balance by using the IRS Immediate pay service from your checking account or savings accounts, submitting a credit card through a payment processor for a fee, or paying by check or money order. 

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

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

How to e-file a tax return?

  • Free File Fillable Forms — If your income is over $72,000 and you’re comfortable doing your taxes without help, you can use Free File Fillable Forms from the IRS. The forms do the math for you and offer standard guidance.  You can only do your federal return with these forms. 
  • Utilize an online tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These choices are a simple way to finish and e-file your own forms.  Some applications suppliers charge for their apps, Some are free.   The software asks you simple questions about your own 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 returns.  However, eligibility for free aid is typically limited based on income, and some providers cater to particular demographic groups.  The IRS maintains a database of authorized providers, but be aware this alternative is likely to be the most costly one. 
  • Employing online tax preparation software is far and away the preferred approach of most taxpayers.  In fact, the IRS says it expected more than four in five tax returns to be submitted through tax return prep software.

    Is e-filing really secure?

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

    “In actuality, it may be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your data 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 data safe.  “Trainers normally use IRS specific APIs that require ab sessions,” Chow says.  “All this is routed over TLS encrypted links “

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

    Bottom line

    For many 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 options.  Just make sure to use tax preparation software from a trusted source, so you may ensure the information which you provide to transmit to the IRS is going to be kept secure.