Filing income tax forms has never been a particularly pleasant task. But it’s much easier today than it once was. There was a time when our only options were to file on paper and do all of the calculations ourselves, or haul mountains of paperwork to an accountant and pay him lots of money to file our taxes.
Electronic filing, also known as e-file, has made tax preparation much simpler. In the beginning, it was only used by tax preparation professionals. But today, we can use e-file to file our taxes online. We must still go through a third party provider, but filing electronically is cheaper and easier than paying someone to do all the work.
By definition, e-file is a method for submitting tax returns. It involves putting the information from the return into a standardized format and transmitting it electronically to the IRS. The IRS checks the return, and if approved, sends the state portion to the filer’s state. If the return is rejected, it notifies the e-file provider of the problem so that it can be rectified before processing continues.
How to E-file
The average taxpayer can’t directly e-file a return with the IRS. He must have his taxes prepared and e-filed by a professional or use software from a third party vendor to prepare taxes on a computer. This software may be installed on the user’s computer or used online via the vendor’s website.
Prices for e-filing vary. If using a traditional tax preparation service, the cost of e-filing is added onto the customer’s bill for the service. When doing taxes using software from a third party vendor, e-filing is usually included in the price of the software. Some taxpayers qualify for free online tax preparation and e-filing through the IRS’s Free File program. Check the IRS website to find out if you qualify.
Advantages of E-filing
E-filing offers several advantages over paper filing. These include the following:
* E-filing leaves less room for error. When you file online or with IRS-approved software, all of the calculations are done for you. That means that there should be no mathematical errors in your return.
* Returns that are e-filed are processed much faster than those submitted on paper. If there is an error, you will be notified of it quickly. Otherwise, your return will be processed in a fraction of the time that it would take otherwise.
* You can get your refund faster. If you request a check, it will be mailed out sooner than it would if you filed on paper. If you have your refund direct deposited into your bank account, you can get it in as little as two to three weeks.
* You don’t have to worry about whether or not the IRS and your state tax authority received your return. You will receive confirmation of receipt within 48 hours of filing.
When it comes to income taxes, e-filing is one of the greatest innovations ever. It has made it less expensive and more convenient for the average person to file taxes while helping the IRS process returns more efficiently. If you’ve never e-filed, give it a try the next time you file your taxes. You’ll be glad you did.
