Is It Safe to E-File Your Tax Return?

E-File is a fast and secure way to submit your tax returns

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When you e-file your taxes, you don't need to deal with paper forms, envelope stuffing, and the postage to file your return. You are, however, electronically transmitting your sensitive personal financial and tax data, as well as your credit card or bank account numbers if you owe the IRS or you are due for a refund. You may be asking: Is e-file safe when submitting your tax returns?

The short answer is yes. E-filing is very safe for submitting your tax returns. The chances are extremely remote that your income tax data could be stolen when you e-file. In fact, it's more secure than mailing a tax return via snail mail, because the data in an e-filed tax return is specially encrypted for extra security, which prevents any access to data as it moves between your tax software and the IRS or state tax agency.

Your Tax Software's E-File Policy

If you still have concerns about e-filing your tax return, visit the website of the tax software you want to use and read its privacy policy. Search the support pages to find details on the technology the site uses for e-filing.

The tax software site should guarantee that it uses the most secure technology available, typically a form of encryption. If you are considering filing a state return electronically, be sure the tax software information includes the same security for state tax agencies.

If you haven't decided which tax software you want to use to complete your return, check out reviews of 18 of the most popular tax software applications available to find one you feel the most comfortable with.

E-Filing Offers Numerous Benefits

E-filing isn't just some new way of embracing technology and saving a few sheets of paper or a few cents on postage. Aside from providing a safe and secure transfer of your data to the IRS or your state's taxing authority, it offers several other benefits for you.

Easy and accurate: When you e-file, you'll enter your tax information into online software that does the math for you. It also walks you through the process of completing your return in a straightforward manner, and you can save your work to finish it later if needed.

Many tax software packages also ask a series of questions designed to walk you through possible tax credits and deductions, helping you to get the largest return, or pay the least amount of taxes possible.

Convenient: E-filed returns can be filed at any time of day or night. If you haven't gotten around to doing your taxes until the last minute, you can do them late at night or in the wee hours of the morning, submit online, and get back to bed. You can also have your tax preparer send your return via e-file, in order to submit your tax return information as soon as the work is finished.

Faster refund: Since you don't have to wait for the mailman to deliver your return to the taxing authority, and since your e-filed return is likely mistake-free, you'll often receive your refund faster than if you'd used snail mail. To speed up your return even more, you can choose to have your funds sent to your bank account through automatic deposit.

No charge: In most cases, you can file your federal return at no charge by using IRS Free File on the IRS.gov website. The IRS also offers programs for volunteer tax assistance and tax counseling for low-income and elderly taxpayers, which includes free tax preparation assistance and free e-filing.

Several payment options: If you owe money for your taxes, you can e-file any date up to the April filing deadline and set up an automatic payment plan with the IRS for no cost. You can also pay your taxes with a debit or credit card for a small fee, or explore other payment options listed on IRS.gov's payment options page.

A Few More Reasons to E-File

Mail gets lost or stolen: Your tax return can get lost in the mail, while an e-filed return doesn't have that problem. File electronically, and you get quick confirmation that your tax return has been submitted successfully, as well as confirmation that the IRS has accepted it.

Know when your refund will be deposited: If you have a tax refund coming, your tax software can usually tell you when your refund is being processed and when to expect your refund to be deposited.

No number errors: Prepare your tax return on paper, and you may make an error in calculations or when transferring numbers to your tax forms. Income tax software is required to offer the option to e-file, and the software will do all the tax calculations, even double-checking the numbers prior to submitting the return.

E-filed returns do not pass through human hands: When you mail in a tax return, someone at the IRS has to enter or scan your data into their systems. Keying errors and technical problems can interfere with getting your taxes filed properly. When you e-file, your data goes directly into the IRS systems, bypassing the chance for human error.

The Wave of the Future

The IRS prefers e-filed returns over paper returns, and starting back in tax year 2010, the IRS stopped mailing Form 1040, Schedule A, and other tax-related forms to taxpayers. According to the IRS, this saves taxpayers around $10 million per year, and paper forms are becoming increasingly obsolete.