Electronic filing or “e-filing” your taxes is the process of sending your income tax return to the IRS or state tax authority via an online tax system. Since being introduced in the early 1990s, e-filing has become an increasingly commonplace method of sending your tax returns to the IRS. In 2016, almost 90% of federal tax returns were filed electronically, and that number looks set to grow even more.
E-filing is generally considered safer than sending a tax return in the mail, and there is no chance of it becoming lost or damaged in the mailing process. Your tax return data is encrypted when filing electronically, meaning that it is much harder for criminals to obtain. E-filing your taxes is also simply convenient, due to the system’s speed, accuracy, and simplicity.
Electronically filing your taxes gives you some flexibility, and means that you can file taxes from the comfort of your own home at a time that suits you (as long as it is within the deadline). Many people who work irregular hours (such as night shifts) use electronic filing to send their tax returns over the internet at night, when other people (such as postal workers) may be asleep. Electronic filing also allows you to have your tax history available at your fingertips, meaning that your historical tax data can be easily viewed whenever you need to access it.
The vast majority of tax software programs come with e-file options, and there are now numerous e-filing apps that allow you to file your taxes directly from your electronic devices. The IRS even has its own official app, IRS2GO, which tracks your tax returns after submission, allowing you to keep up with their status.
Most of the time, the IRS processes electronically submitted taxes more quickly, often within three weeks. This is because electronic tax returns can be analyzed and sorted more efficiently than traditional paper forms, which may require many hours of human labor to peruse. If you’re owed a tax refund, e-filing allows this money to be directly deposited into your bank account of choice, meaning that you’ll receive any tax refunds more quickly too.
When you file electronically, computers will perform all of the math required, meaning that you’re much less likely to be overcharged or undercharged due to simple human error. Online e-filing systems also make tax deductions and tax credits much easier to understand, and often feature useful “help” blurbs that clearly outline any tax deductions or credits you may be entitled to.
E-filing often means that you needn’t hire an accountant, as the tax process is often simplified, with the cost of human labor being significantly reduced. This means that you will often save money on fees. E-filed returns actually cost 20 times less to process when compared to a traditional paper tax return, saving taxpayers money in the long run.
Though most e-filing systems do require that you pay a fee to use them, the “IRS Free File” system allows you to e-file your taxes for free if your adjusted gross income comes to $64,000 or less.