Is e-filing a much better way to record your taxes?
Americans and the IRS might not agree about everything, but they are mostly on the exact same page in regards 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 as it’s a win-win for taxpayers and the IRS.
If you e-file your federal income tax return, you save the IRS cash because its workers do not have to spend time manually processing your return. In return, you can find any refund you are owed quicker, particularly in the event that you have it directly deposited to your bank account.
But what about security? And can electronic filing really provide you access to all of the forms that you may need in case you have a intricate tax situation? Are there situations when you can not e-file? Let us look at the advantages of e-filing, and if it might be the best filing option for your needs.
If you are Considering e-filing, a Few of the advantages include:
- Quick affirmation your forms have been received: The IRS will confirm a tax filing has been received within one day of digital submission. For paper filers, the IRS does not send any acknowledgment your forms have arrived safely.
Timely refunds: When you publish a paper filing, it can take six to eight weeks to receive a tax refund. With e-filing, you are going to get your money in 3 weeks or less. Choosing direct deposit can also accelerate the refund procedure.
Reduced likelihood of errors: According to the IRS, there is approximately a 1 percent error rate on e-filed yields, compared with a 20% rate of errors on paper filings. The IRS also provides more info on issues discovered on e-filed returns compared with paper returns.
Easy payment process: If you owe the IRS money, it is easier to pay at your advantage when you e-file. It’s possible to submit returns early and pay later if needed, as long as you pay from the April 15 filing deadline. You also have the choice to pay your balance by using the IRS Direct pay service from your checking account or savings accounts, submitting a credit card through a payment processor for a fee, or paying by check or money order. Just be aware delaying payment following the filing due date (typically April 15) can lead to penalties and interest.
Digital storage of tax information: Submitting returns electronically means there’s an electronic backup of your tax documents. If something happens to your paperwork, you’ll have a digital backup.
The good news: Most taxpayers do opt to e-file and find those advantages — and the process of doing so is easy.
How to e-file a tax return?
- 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.
- Free File Fillable Forms — If your income is more than $72,000 and you’re comfortable doing your taxes without any assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and provide basic advice. You can simply do your federal return with all these forms.
- Use an internet tax preparation service or tax software: Tax preparation software and online filing services are options. These choices are a simple way to finish and e-file your own forms. Some software suppliers charge for their programs, Some are liberated. The software asks you simple questions about your life and finances to steer you through the completion of your forms.
- Get complimentary, in-person tax aid: In most states, you will find volunteers to help prepare and e-file yields. But eligibility for free aid is normally restricted based on earnings, and a few providers cater to specific demographic groups.
- Hire a paid preparer: Paid tax preparers, such as CPAs, can e-file returns for you if they are licensed IRS e-file providers. The IRS maintains a record of licensed providers, but you should be aware this alternative is likely to be the most costly one.
Employing online tax preparation 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 submitted through tax return prep software.
Is e-filing really stable?
While e-filing is suitable, you may be worried about security — especially with all these data breaches. But experts agree that this is not an issue that should dissuade you by e-filing.
“E-filing a tax return has proven to be an extremely secure way to file your taxes,” states Scott Grissom, vice president of product direction, marketing and sales at LegalShield. “In fact, it can be more secure than paper filing as you’re sending your personal information through an encrypted network as opposed to exposing your information in the email.”
Dennis Chow, vice president of data security at SCIS Security, clarifies the IRS has put safety measures in place to keep your data safe. “Vendors typically utilize IRS particular APIs that require ab sessions,” Chow says. “All this can be routed over TLS encrypted connections”
It’s important to use a trusted service to assist you record your taxes. Chow advises not to e-file on a computer or use an online connection that is not confidential.
For many taxpayers, it is sensible to e-file a return since it’s the most convenient way to file your tax information to the IRS and it allows for timely refunds and effortless payment choices. Just be certain to use tax planning software from a trusted source, so that you may ensure the information which you supply to transmit to the IRS will be kept protected.