Warren Buffett Newsletter 2018 – What to Consider When Filing My Taxes Online

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

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

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

If you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. In return, you could get any refund you are owed faster, especially if you have it directly deposited into your bank accounts.

But what about security?  And can electronic filing really provide you access to all the forms you may need in case you have a intricate tax situation?  Are there ever situations when you can’t 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, some of the advantages include:

  1. Quick confirmation your forms have been received: The IRS will confirm a tax filing has been received within 24 hours of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived . 
  2. Timely refunds: When you publish a paper filing, it can take six to eight weeks to be given a tax refund.  With e-filing, you’ll get your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund process.

  3. Reduced chance of errors: In accordance with the IRS, there is approximately a 1 percent error rate on e-filed yields, compared with a 20% rate of errors on paper filings.  The IRS also provides more information on issues discovered on e-filed returns compared with paper yields.

  4. Easy payment procedure: If you owe the IRS money, it is easier to cover at your advantage when you e-file.  It’s possible to submit returns early and pay afterwards if necessary, as long as you pay by the April 15 filing deadline.  Additionally you have the choice to pay your balance by using the IRS Direct pay service from your checking or savings accounts, submitting a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment following the filing due date (typically April 15) will lead to interest and penalties.

  5. Digital storage of taxation information: Submitting returns electronically implies there’s a digital copy 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 find those benefits — and the process of doing this is simple.

The way to e-file a tax return?

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

  • Utilize an internet tax preparation tax or service software: Tax prep software and online filing services are alternatives.  These options are an easy way to complete and e-file your own forms.  Some software providers charge for their programs, Some are liberated.   The program asks you simple questions about your life and financing to steer you through the completion of your types.  
  • Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free aid is normally restricted based on income, and a few services cater to particular demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they are authorized IRS e-file providers. The IRS maintains a database of licensed 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 the majority of taxpayers.  Actually, the IRS says it expected over four tax returns to be filed through tax return prep program.

    Is e-filing really stable?

    While e-filing is suitable, you could worry about security — particularly with so many data breaches.  But experts agree that this is not a problem which should dissuade you from e-filing.

    “In fact, it can be more secure than paper filing as you’re sending your personal information through an encrypted network rather than exposing your data in the email.”

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

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

    Bottom line

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