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

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

Americans and the IRS may not agree on everything, but they’re largely 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 a favorite because it’s a win-win for taxpayers and the IRS.

In return, you can find any refund you’re owed quicker, particularly in the event that you have it directly deposited to your bank account.

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

If you are Considering e-filing, a Few of the advantages include:

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

    Timely refunds: When you submit a paper filing, it can take six to eight months to receive a tax refund.  With e-filing, you are going to receive your money in three weeks or less.  Choosing direct deposit may also accelerate the refund procedure.

  2. Reduced likelihood of mistakes: In accordance with the IRS, there is approximately a 1 percent error rate on e-filed yields, compared with a 20% speed of errors on paper filings.  The IRS also provides more information on problems discovered on e-filed yields compared with paper yields.

  3. Simple payment process: If you owe the IRS money, it is easier to pay at your convenience when you e-file.  You can submit returns early and pay later if necessary, provided that you pay from the April 15 filing deadline.  And you’re able to schedule electronic funds transfers to easily send the IRS what you owe on a date of your choosing — again, provided that the IRS receives your payment by Tax Day. Additionally you have the option to pay your balance by making use of the IRS Immediate pay service from your checking account 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 information: Submitting returns electronically implies there is an electronic backup of your tax records.  So if something happens to your paperwork, you will have an electronic backup.

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

How to e-file a tax return?

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

  • Use an internet tax preparation tax or service software: Tax prep software and online filing services are options.  These choices are an easy way to complete and e-file your forms.  Some applications suppliers charge for their apps, Some are free.   The program asks you simple questions about your life and financing to guide 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.  But eligibility for free aid is normally restricted based on income, and a few services appeal to particular demographic groups.  By way of instance, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older.  The IRS maintains a record of licensed providers, but be aware this alternative is very likely to be the most costly one. 

    Employing online tax preparation software is far and away the favored approach of the majority of taxpayers.  Actually, the IRS says it anticipated more than four in five tax returns to be filed through tax return prep software.

    Is e-filing really stable?

    While e-filing is convenient, you could be worried about security — especially with all these data breaches.  But experts agree this is not a problem that should deter you by e-filing.

    “E-filing a tax return has proven to be a very secure way to file your taxes,” says Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In actuality, it may be more secure than paper filing since you’re sending your personal information through an encrypted network rather than exposing your data in the mail.”

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

    It is very important to employ a trusted service to help you file your taxes.  Chow advises to not 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’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 certain that you use tax preparation software from a trusted source, so that you can ensure the information which you supply to transmit to the IRS will be kept protected.