Warren Buffett Portfolio Holdings – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree on everything, but they’re largely on precisely the exact same page in regards 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’s a win-win for taxpayers and the IRS.

If you e-file your federal income tax return, you save the IRS money because its employees don’t need to spend time manually processing your return. In return, you can find any refund you are owed faster, especially in the event that you have it directly deposited into your bank account.

However, what about safety?  And can electronic filing really provide you access to all of the forms you may need if you’ve got a complex tax situation?  Are there situations when you can not e-file?  Let us look at the advantages of e-filing, and if it may be the best filing choice for your needs.

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

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

    Timely refunds: When you publish a paper filing, it can 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 may also accelerate the refund process.

  2. Reduced likelihood of mistakes: According to the IRS, there’s around a 1% error rate on e-filed yields, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more info on issues discovered on e-filed yields compared with paper returns.

  3. Easy payment procedure: If you owe the IRS money, it is simpler to pay at your convenience when you e-file.  It’s possible to submit returns early and pay later if needed, provided that you pay from 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 your checking account or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) will result in interest and penalties.

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

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

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

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

  • Use an online tax preparation service or tax applications: Tax preparation software and online filing services are options.  These choices are a simple way to finish and e-file your own forms.  Some software suppliers charge for their apps, Some are free.   The software asks you simple questions about your own life and finances to steer you through the completion of your forms.  
  • Get free, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is typically limited based on income, and a few services cater to particular demographic groups.  By way of instance, Tax Counseling for the Elderly programs focus primarily on assisting filers who are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they are authorized IRS e-file providers. The IRS maintains a database of licensed providers, but you should be aware this option is likely to be the most costly one. 
  • Employing online tax prep software is far and away the favored approach of the majority of taxpayers.  In fact, the IRS says it anticipated more than four tax returns to be filed through tax return prep program.

    Is e-filing really stable?

    While e-filing is suitable, you may be worried about security — particularly with so many data breaches.  But experts agree this is not a problem that should deter you by 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 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 specific APIs that need token sessions,” Chow says.  “All of this can be routed over TLS encrypted links “

    It’s very important to employ a trustworthy service that will help you file your taxes.  Chow advises to not e-file on a public computer or utilize an internet connection which is not confidential.

    Bottom line

    For most taxpayers, it is sensible to e-file a return since it is the most convenient way to file your tax information to the IRS and it allows for timely refunds and easy payment options.  Just be certain that you use tax preparation software from a trusted source, so you may make certain the information which you provide to transmit to the IRS is going to be kept secure.