Warren Buffett Way Investment Strategies – What to Consider When Filing My Taxes Online

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

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

The majority of individual income tax returns submitted 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 workers do not need to spend time manually processing your return. And in return, you could find any refund you’re owed faster, particularly if you have it directly deposited to your bank account.

However, what about safety?  And can electronic filing really give you access to all of the forms that you may need in case you have a complex tax situation?  Are there ever 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 needs.

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

  1. Quick affirmation your forms have been received: The IRS will confirm a tax filing has been received within 24 hours of electronic 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 months to receive a tax refund.  With e-filing, you’ll get your money in 3 weeks or not.  Choosing direct deposit may also accelerate the refund procedure.

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

  4. Easy payment process: If you owe the IRS money, it’s easier to pay at your convenience if you e-file.  You can submit returns early and pay afterwards if necessary, as long as you pay by the April 15 filing deadline.  You also have the choice to pay your balance by using the IRS Immediate pay service from your checking or savings account, submitting a credit card through a payment processor for a commission, or paying by check or money order.  Just be aware delaying payment following the filing due date (typically April 15) will result in penalties and interest.

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

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

The way to e-file a tax return?

    1. Utilize IRS Free File: If your adjusted gross income is $72,000 or not as you may be able to use the IRS Free File program.  The forms do the math for you and provide basic guidance.  You can only do your federal return with these kinds. 
    2. Utilize an online tax preparation tax or service applications: Tax prep software and online filing services are options.  These options are an easy way to finish and e-file your forms.  Some software suppliers charge for their apps, Some are free.   The program asks you simple questions about your own life and financing to guide you through the completion of your types.  
    3. Get complimentary, in-person tax aid: In most states, you can find volunteers to help prepare and e-file yields.  However, eligibility for free aid is typically limited based on earnings, and a few providers cater to specific demographic groups. 
    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 alternative is very likely to be the most costly one. 

Employing online tax prep software is far and away the preferred approach of most taxpayers.  In fact, the IRS says it expected more than four tax returns to be filed through tax return prep software.

Is e-filing really secure?

While e-filing is suitable, you could worry about safety — particularly with so many data breaches.  But experts agree that this isn’t a problem which should dissuade 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 rather than exposing your information in the mail.”

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

It’s important to use a trustworthy service that will assist you file your taxes.  Chow advises to not e-file on a computer or use 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 file your tax information to the IRS and it allows for timely refunds and easy payment choices.  Just be certain that you use tax preparation software from a dependable source, so you can make certain the information you supply to transmit to the IRS will be kept protected.