Warren Buffett Portfolio Advice – 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 about everything, but they are largely on precisely the same page in regards to e-filing individual income tax returns.

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

When you e-file your federal income tax return, you save the IRS cash because its workers don’t have to spend time manually processing your return. And in return, you could get any refund you are owed quicker, especially in the event that you have it directly deposited to your bank accounts.

But what about security?  And can electronic filing really provide you access to all the forms you might need if you’ve got a complex tax situation?  Are there ever situations when you can’t e-file?  Let us look at the benefits of e-filing, and whether it may be the very best filing option for your needs.

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

  1. Quick confirmation your forms have been obtained: The IRS will confirm a tax filing has been received within one day of electronic submission.  For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely. 
  2. Timely refunds: When you publish a paper filing, it may take six to eight months to receive a tax refund.  With e-filing, you’ll receive your money in three weeks or not.  Choosing direct deposit may also accelerate the refund procedure.

  3. Reduced likelihood of mistakes: According to the IRS, there is around a 1% 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 yields compared with paper yields.

  4. Easy payment procedure: If you owe the IRS money, it is simpler to pay at your convenience if you e-file.  You can submit returns early and pay later if necessary, as long as you pay from the April 15 filing deadline.  You also have the option to pay your balance by using the IRS Direct 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.  Just be aware delaying payment following the filing due date (typically April 15) will result in penalties and interest.

  5. Digital storage of tax information: Submitting returns electronically means there’s an electronic copy of your tax records.  So if something happens to your paperwork, you’ll have an electronic backup.

The fantastic news: Most taxpayers do opt to e-file and get those advantages — and the process of doing so is simple.

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

    1. Utilize 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.  The forms do the math for you and provide standard advice.  You can simply do your federal return with these forms. 
    2. Utilize an internet tax preparation service or tax applications: Tax prep software and online filing services are alternatives.  These options are a simple way to complete and e-file your own forms.  Some software providers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and finances to guide you through the completion of your types.  
    3. Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free help is typically limited based on income, and a few providers cater to particular demographic groups.  For instance, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older.  The IRS maintains a record of authorized providers, but you should be aware this alternative is very likely to be the most costly one. 

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

      Is e-filing really stable?

      While e-filing is suitable, you could be worried about security — especially with so many data breaches.  But experts agree that this is not an issue that should deter you by e-filing.

      “In fact, it can be more secure than paper filing as you’re sending your private information through an encrypted network as opposed to exposing your information 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 is routed over TLS encrypted connections”

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

      Bottom line

      For most taxpayers, it makes sense to e-file a yield because it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment options.  Just be sure that you use tax planning software from a trusted source, so that you can make certain the information which you supply to transmit to the IRS is going to be kept secure.