Warren Buffett Stock Picks 2020 – What to Consider When Filing My Taxes Online

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

Americans and the IRS may not agree about everything, but they are mostly 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 popular as it’s a win-win for taxpayers and the IRS.

When you e-file your federal income tax return, you conserve the IRS money because its employees don’t have to spend time manually processing your return. In return, you can get any refund you’re owed faster, especially in the event that you have it directly deposited into your bank accounts.

However, what about safety?  And can electronic filing actually provide you access to all of the forms you may need in case you’ve got a complex tax situation?  Are there ever situations when you can’t e-file?  Let us look at the benefits of e-filing, and whether it might be the best filing option for your needs.

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

  1. Quick confirmation your forms have been received: The IRS will confirm a tax filing was received within one day of digital submission.  For paper filers, the IRS does not send any acknowledgment that your forms have arrived . 
  2. Timely refunds: When you submit a paper filing, it can take six to eight weeks to be given a tax refund.  With e-filing, you’ll receive your money in three weeks or less.  Choosing direct deposit may also accelerate the refund procedure.

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

  4. Simple payment process: If you owe the IRS money, it is simpler to pay at your advantage when you e-file.  You can submit returns early and pay afterwards if needed, as long as you pay from the April 15 filing deadline.  And you’re able to schedule electronic funds transfers to easily send the IRS what you owe on a date of your choosing again, provided that the IRS receives your payment by Tax Day. You also have the choice to pay your balance by using 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. 

  5. Digital storage of tax data: Submitting returns electronically means there’s a digital copy of your tax records.  If something happens to your paperwork, then you’ll have a digital backup.

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

How to e-file a tax return?

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

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or less you may be able to use the IRS Free File program. 
    2. Free File Fillable Types — If your income is over $72,000 and you’re comfortable doing your taxes without assistance, you can use Free File Fillable Forms from the IRS. The forms do the math for you and provide basic advice.  You can only do your federal return with all these forms. 
    3. Use an online tax preparation service or tax software: Tax preparation software and online filing services are alternatives.  These choices are a simple way to complete and e-file your own forms.  Some applications providers charge for their apps, Some are free.   The software asks you simple questions about your life and financing to steer you through the completion of your types.  
    4. Get free, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free aid is typically limited based on income, and a few services cater to specific demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older.  The IRS maintains a record of licensed providers, but be aware this option is 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 expected over four tax returns to be submitted through tax return prep software.

Is e-filing really stable?

While e-filing is suitable, you could worry about safety — particularly with all these data breaches.  But experts agree this is not a problem that should deter you by e-filing.

“In fact, 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 mail.”

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

It is very important to use a trustworthy service that will assist you file your taxes.  Chow advises to not e-file on a computer or utilize an online connection which isn’t confidential.

Bottom line

For most taxpayers, it makes sense to e-file a yield since it is the most convenient way to submit your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just make certain that you use tax preparation software from a trusted source, so you can ensure the information you provide to transmit to the IRS is going to be kept secure.