Warren Buffett Stock Options – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree on everything, but they are largely on the exact 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 a favorite because 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 employees don’t have to spend time manually processing your return. And in return, you can find any refund you’re owed quicker, especially if you have it directly deposited to your bank account.

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

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

  1. Quick confirmation your forms are received: The IRS will confirm a tax filing was received within one day of electronic submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived safely. 
  2. 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 get your money in three weeks or not.  Choosing direct deposit can also speed up the refund process.

  3. Reduced likelihood of mistakes: According to the IRS, there is approximately a 1 percent 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 returns compared with paper returns.

  4. Simple payment procedure: If you owe the IRS money, it’s easier to cover at your advantage when you e-file.  It’s possible to submit returns early and pay afterwards if needed, provided that you pay by 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 using the IRS Immediate 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. 

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

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

The way to e-file a tax return?

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

    1. Use IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program.  The forms do the math for you and provide standard guidance.  You can simply do your federal return with all these kinds. 
    2. Utilize an internet tax preparation service or tax software: Tax prep software and online filing services are alternatives.  These choices are an easy way to complete and e-file your own forms.  Some software providers charge for their apps, Some are liberated.   The software asks you simple questions about your own life and financing to steer you through the completion of your forms.  
    3. Get free, in-person tax help: In most states, you will find volunteers to help prepare and e-file yields.  But eligibility for free help is normally restricted based on earnings, and some services cater 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, such as 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 option is likely to be the most costly one. 

Using online tax preparation software is far and away the favored approach of most taxpayers.  Actually, the IRS says it anticipated 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 — particularly with all these data breaches.  But experts agree that this is not a problem that should deter you by e-filing.

“E-filing a tax return has proven to be an extremely secure way to file your taxes,” says Scott Grissom, vice president of product leadership, advertising and sales at LegalShield. “In actuality, it can be more secure than paper filing since 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 the IRS has put safety measures in place to keep your information secure.  “Trainers normally use IRS particular APIs that need token sessions,” Chow says.  “All of this is routed over TLS encrypted links .”

It is very important to employ a trusted service that will assist you file your taxes.  Chow advises not to e-file on a public computer or utilize an internet connection that isn’t private.

Bottom line

For many taxpayers, it makes sense to e-file a return because it’s the most convenient way to submit your tax information to the IRS and it allows for timely refunds and effortless payment choices.  Just make certain to use tax planning software from a trusted source, so you may make certain the information which you supply to transmit to the IRS will be kept secure.