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

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

Americans and the IRS might not agree on everything, but they are mostly on precisely the 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 popular as it is a win-win for taxpayers and the IRS.

When you e-file your federal income tax return, you save the IRS money because its workers do not have to spend time manually processing your return. And in return, you can get any refund you’re owed quicker, particularly if you have it directly deposited to your bank accounts.

But what about safety?  And can digital filing really provide you access to all of the forms that you might need in case you have 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 may be the best filing option for your needs.

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

  1. Quick affirmation your forms are obtained: The IRS will confirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived safely. 

    Timely refunds: When you submit a paper filing, it may take six to eight months to receive a tax refund.  With e-filing, you are going to receive your money in 3 weeks or less.  Choosing direct deposit may also speed up 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% rate of errors on paper filings.  The IRS also provides more information on issues discovered on e-filed yields compared with paper returns.

  3. Simple payment process: If you owe the IRS money, it is simpler to cover at your advantage when you e-file.  You can submit returns early and pay later if needed, as long as you pay from the April 15 filing deadline.  And you’re able to 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 option to pay your balance by making use of the IRS Direct pay service from the checking account or savings account, filing a credit card through a payment processor for a commission, or paying by check or money order. 

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

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

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

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you could have the ability to use the IRS Free File program.  The types do the math for you and provide standard advice.  You can only do your federal return with these kinds. 
    2. Utilize an online tax preparation tax or service software: Tax preparation software and online filing services are alternatives.  These options are an easy way to finish and e-file your own forms.  Some software suppliers charge for their apps, Some are free.   The program asks you simple questions about your own life and finances to guide you through the completion of your forms.  
    3. Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  But eligibility for free aid is typically limited based on income, and some providers appeal to specific demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers that are 60 and older. 
    4. Hire a paid preparer: Paid tax preparers, including CPAs, can e-file yields for you if they’re licensed IRS e-file providers. The IRS maintains a database of licensed providers, but 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.  In fact, the IRS says it expected over four in five tax returns to be submitted 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 this isn’t an issue which should dissuade you from 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, advertising and revenue at LegalShield. “In actuality, it can be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your information in the mail.”

      Dennis Chow, vice president of data security at SCIS Security, clarifies that the IRS has put security measures in place to keep your data secure.  “Vendors typically utilize IRS specific APIs that need token sessions,” Chow says.  “All this is routed over TLS encrypted connections”

      It is important to employ a trustworthy service to assist you record your taxes.  Chow advises not to e-file on a computer or use an internet connection that is not private.

      Bottom line

      For many taxpayers, it makes sense 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 easy payment options.  Just be certain that you use tax planning software from a trusted source, so that you can ensure the information you provide to transmit to the IRS will be kept protected.