Warren Buffett Reading Financial Statements – What to Consider When Filing My Taxes Online

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

Americans and the IRS might not agree on everything, but they’re mostly on the same page when it comes to e-filing individual income tax returns.

The majority of individual income tax returns filed to the IRS are e-filed. 

In return, you could get any refund you are owed quicker, particularly in the event that you have it directly deposited to your bank accounts.

However, what about security?  And can electronic filing actually give you access to all of the forms that you may need in case you’ve got 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 may be the best filing option for your requirements.

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

  1. Quick confirmation your forms have been received: The IRS will affirm a tax filing has been received within 24 hours of digital submission.  For paper filers, the IRS doesn’t send any acknowledgment your forms have arrived . 
  2. Timely refunds: When you submit a paper filing, it may take six to eight months to be given a tax refund.  With e-filing, you are going to get your money in three weeks or less.  Choosing direct deposit may also accelerate the refund process.

  3. Reduced chance of errors: In accordance with the IRS, there’s approximately a 1 percent error rate on e-filed returns, compared with a 20% speed of mistakes on paper filings.  The IRS also provides more info on problems discovered on e-filed returns compared with paper returns.

  4. Simple payment procedure: If you owe the IRS money, it’s easier to cover at your advantage 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 Immediate pay service from the checking account or savings accounts, filing a credit card through a payment processor for a commission, or paying by check or money order. 

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

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

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

  • Free File Fillable Forms — If your income is over $72,000 and you are comfortable doing your earnings without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide standard guidance.  You can only do your federal return with these forms. 
  • Use an online tax preparation service or tax software: Tax preparation software and online filing services are options.  These options are an easy way to complete and e-file your own forms.  Some software providers 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 forms.  
  • Get complimentary, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns.  But eligibility for free aid is typically limited based on income, and a few services cater to particular demographic groups. 
  • Hire a paid preparer: Paid tax preparers, including CPAs, can e-file returns for you if they are licensed IRS e-file providers. The IRS maintains a database of licensed providers, but be aware this alternative is likely to be the most costly one. 

    Employing online tax prep software is far and away the preferred approach of the majority of taxpayers.  Actually, the IRS says it expected over four tax returns to be filed through tax return prep program.

    Is e-filing really secure?

    While e-filing is suitable, you may worry about safety — particularly with all these data breaches.  But experts agree this isn’t an issue that should dissuade you from e-filing.

    “E-filing a tax return has proven to be a very secure way to file your taxes,” states Scott Grissom, vice president of product direction, advertising and revenue at LegalShield. “In actuality, it can be more secure than paper filing since you’re sending your private information through an encrypted system rather than exposing your information in the mail.”

    Dennis Chow, vice president of information security at SCIS Security, explains the IRS has set security measures in place to keep your data safe.  “Trainers normally use IRS specific APIs that need ab sessions,” Chow says.  “All this can be routed over TLS encrypted connections.”

    It is important to use a trusted service to help you file your taxes.  Chow advises to not e-file on a public computer or utilize an internet connection which is not private.

    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 choices.  Just make certain that you use tax planning software from a trusted source, so that you may ensure the information which you provide to transmit to the IRS will be kept protected.