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

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

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

The majority of 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.

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

But what about security?  And can digital filing really give you access to all of the forms you may need in case you’ve got a intricate tax situation?  Are there ever situations when you can’t e-file?  Let’s look at the benefits of e-filing, and whether it might 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 are obtained: The IRS will affirm a tax filing has been received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment 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’ll receive your money in 3 weeks or not.  Choosing direct deposit may also speed up the refund procedure.

  2. Reduced chance of errors: According to the IRS, there is around a 1 percent error rate on e-filed returns, 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 returns.

  3. Simple payment process: If you owe the IRS money, it’s simpler to pay at your advantage if you e-file.  You can submit returns early and pay afterwards if necessary, provided that you pay from the April 15 filing deadline.  Additionally you have the option to pay your balance by making use of the IRS Direct pay service from the checking or savings account, filing a credit card through a payment processor for a fee, or paying by check or money order. 

  4. Digital storage of tax information: Submitting returns electronically means there’s a digital copy of your tax records.  So if something happens to your paperwork, then you will have a digital backup.

The fantastic news: Most taxpayers do decide to e-file and get those advantages — and the practice of doing this is simple.

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

  • Free File Fillable Types — If your income is more than $72,000 and you are comfortable doing your taxes without any help, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer standard guidance.  You can only do your federal return with these kinds. 
  • Use an online tax preparation tax or service applications: Tax preparation software and online filing services are options.  These choices are a simple way to complete and e-file your forms.  Some applications providers charge for their programs, Some are free.   The software asks you simple questions about your life and finances to guide you through the completion of your types.  
  • Get complimentary, in-person tax help: In most states, you will find volunteers to help prepare and e-file yields.  However, eligibility for free help is normally restricted based on income, and a few providers cater to specific demographic groups.  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 most taxpayers.  In fact, the IRS says it anticipated more than four in five tax returns to be submitted through tax return prep software.

    Is e-filing really stable?

    While e-filing is suitable, you may be worried about safety — particularly with so many data breaches.  But experts agree this isn’t a problem which should dissuade you from e-filing.

    “In actuality, it may 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 security measures in place to keep your information safe.  “Vendors typically utilize IRS specific APIs that require token sessions,” Chow says.  “All this is routed over TLS encrypted connections.”

    It is very important to use a trusted service to help you record your taxes.  Chow advises not to e-file on a computer or utilize an internet connection that is not confidential.

    Bottom line

    For many 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 make sure that you use tax preparation software from a trusted source, so you may ensure the information you provide to transmit to the IRS will be kept secure.