Warren Buffett Talks To Mba Students – What to Consider When Filing My Taxes Online

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

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

Nearly all individual income tax returns submitted to the IRS are e-filed. 

In return, you can find any refund you are owed faster, particularly if you have it directly deposited to your bank accounts.

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

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

  1. Quick affirmation your forms are obtained: The IRS will affirm a tax filing was received within 24 hours of digital submission.  For paper filers, the IRS does not send any acknowledgment your forms have arrived safely. 
  2. Timely refunds: When you publish a paper filing, it can take six to eight weeks to be given a tax refund.  With e-filing, you are going to receive your money in 3 weeks or less.  Choosing direct deposit may also accelerate the refund procedure.

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

  4. Simple payment procedure: If you owe the IRS money, it’s easier to cover at your convenience when you e-file.  It’s possible to submit returns early and pay later if necessary, provided that you pay by 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, as long as 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 accounts, filing a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment after the filing due date (typically April 15) can lead to penalties and interest.

  5. Digital storage of tax information: Submitting returns electronically implies there is a digital copy of your tax documents.  So if something happens to your paperwork, you will have a digital backup.

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

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

  • Free File Fillable Forms — 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 basic guidance.  You can simply do your federal return with these kinds. 
  • Use an internet tax preparation service or tax applications: Tax preparation software and online filing services are alternatives.  These choices are a simple way to complete and e-file your own forms.  Some software providers charge for their programs, Some are liberated.   The software asks you simple questions about your own life and finances to steer you through the completion of your forms.  
  • Get complimentary, in-person tax help: In most states, you can find volunteers to help prepare and e-file returns.  However, eligibility for free aid is normally restricted based on earnings, and some providers appeal to particular demographic groups.  For example, Tax Counseling for the Elderly programs focus primarily on helping filers who are 60 and older. 
  • Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file yields for you if they are authorized IRS e-file providers. The IRS maintains a record of authorized providers, but you should be aware this option is very likely to be the most costly one. 
  • Employing online tax prep software is far and away the favored approach of the majority of taxpayers.  In fact, the IRS says it expected 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 safety — particularly with all these data breaches.  But experts agree that this isn’t a problem which should deter you by e-filing.

    “In actuality, it may be more secure than paper filing since you’re sending your private information through an encrypted system as opposed to exposing your data in the email.”

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

    It’s important to employ a trustworthy service to assist you file your taxes.  Chow advises not to e-file on a public computer or use an online 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 choices.  Just make sure that you use tax preparation software from a dependable source, so you can ensure the information you provide to transmit to the IRS is going to be kept protected.