Is e-filing really a better way to record your taxes?
Americans and the IRS might not agree on everything, but they are largely 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 because it’s a win-win for taxpayers and the IRS.
When you e-file your federal income tax return, you save the IRS cash because its employees don’t need to spend time manually processing your return. In return, you can get any refund you are owed faster, especially if you have it directly deposited into your bank account.
However, what about security? And can electronic filing actually provide you access to all the forms you may need if you have a complex tax situation? Are there situations when you can not 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 thinking about e-filing, some of the advantages include:
- Quick confirmation your forms are obtained: The IRS will confirm a tax filing was received within one day of digital submission. For paper filers, the IRS doesn’t send any acknowledgment that your forms have arrived safely.
Timely refunds: When you submit a paper filing, it can 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 accelerate the refund process.
Reduced likelihood of mistakes: According to the IRS, there’s around a 1 percent error rate on e-filed yields, compared with a 20% speed of errors on paper filings. The IRS also provides more info on problems discovered on e-filed returns compared with paper returns.
Easy payment process: If you owe the IRS money, it’s simpler to pay at your advantage when you e-file. You can submit returns early and pay later if necessary, provided that you pay from the April 15 filing deadline. And you’re able to schedule electronic money transfers to send the IRS what you owe on a date of your choosing again, as long as the IRS receives your payment by Tax Day. Additionally you have the choice to pay your balance by making use of the IRS Direct pay service from your checking or savings account, filing a credit card through a payment processor for a fee, or paying by check or money order. Just be aware delaying payment after the filing due date (typically April 15) will lead to interest and penalties.
Digital storage of taxation information: Submitting returns electronically implies there’s an electronic backup of your tax documents. If something happens to your paperwork, then you will have a digital backup.
The good news: Most taxpayers do decide to e-file and find those advantages — and the process of doing this is simple.
How to e-file a tax return?
You have four choices for submitting an electronically filed tax return to the IRS.
- Utilize IRS Free File: If your adjusted gross income is $72,000 or less you could have the ability to use the IRS Free File program.
- Free File Fillable Forms — If your income is more than $72,000 and you are comfortable doing your taxes without assistance, you can use Free File Fillable Forms from the IRS. The types do the math for you and offer basic guidance. You can only do your federal return with these forms.
- Use an internet tax preparation tax or service software: Tax prep software and online filing services are alternatives. These options are an easy way to finish and e-file your own forms. Some applications suppliers charge for their programs, Some are liberated. The program asks you simple questions about your own life and financing to steer you through the completion of your types.
- Get complimentary, in-person tax help: In most states, you will find volunteers to help prepare and e-file returns. However, eligibility for free aid is typically limited based on earnings, and a few providers cater to specific demographic groups. For example, Tax Counseling for the Elderly programs focus primarily on assisting filers that are 60 and older. The IRS maintains a record of licensed providers, but be aware this alternative is likely to be the most costly one.
Using online tax prep software is far and away the favored approach of most taxpayers. In fact, the IRS says it expected more than four in five tax returns to be filed through tax return prep software.
Is e-filing really secure?
While e-filing is suitable, you may be worried about safety — especially with so many data breaches. But experts agree this is not an issue which should dissuade you by e-filing.
“E-filing a tax return has turned out to be a very secure way to file your taxes,” states Scott Grissom, vice president of product leadership, marketing and sales at LegalShield. “In fact, it can be more secure than paper filing since 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, clarifies that the IRS has set safety measures in place to keep your information secure. “Trainers normally use IRS particular APIs that require token sessions,” Chow says. “All this is routed over TLS encrypted links “
It is important to employ a trustworthy service to assist you file your taxes. Chow advises not to e-file on a computer or utilize an internet connection which is not confidential.
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 easy payment options. Just make certain that you use tax preparation software from a dependable source, so that you can ensure the information you provide to transmit to the IRS is going to be kept protected.