This week’s Tax Tidbit is about electronic filing, or e-filing. There are many reasons and benefits to filing electronically. A Google search will pull hundreds of sites singing the praises of this tax filing alternative. Here are the need-to-know basics:
1. E-filed returns usually contain fewer mistakes. Using tax preparation software greatly reduces errors. They lead you through data entry and conclude with a comprehensive error check. Filing electronically eliminates more potential human error. When you submit a paper return, an IRS representative actually types your return into their system. It is just another possible pitfall.
2. Faster transmittal of your returns. No waiting for snail mail. Once you click the send button on the e-file software your return zips across the internet, directly to the IRS. You’ll also receive an e-mail from the IRS confirming their receipt of your return within 48 hours. This benefit is lost if you file a paper return. (Unless you add postage and mailing your documents “certified with return receipt”.)
3. Receive your refund quicker. Typical refunds from a paper filed return take about 6 weeks. Filing electronically (with direct deposit) can speed your refunds arrival. Most taxpayers can expect to receive their refund in as little as 8 to 15 business days.
4. Securely submit your returns. There are fewer opportunities for identity theft if you transmit your returns using a secure site. Not to mention, your personal financial information isn’t floating around USPS mailrooms.
The IRS provides a list of partner sites for e-filing. The sites offer electronic transmittal either free or at a low fee. The IRS even offers free file for those of us with adjusted gross incomes of $54,000 or less.
Fellow tax blogger, Kay Bell, elaborates in her article“The Many Ways to Electronically File Your Return”.
Additionally, most states offer some sort of e-file option. The IRS supplies a list of live links to states with participating e-filing programs. Check your state for details on their electronic filing requirements and methods.
5. You can file electronically even if you owe money. Simply mail your check via snail mail as usual. Just be sure to put the check in the mail by April 15th to avoid late filing penalties. Add your social security number and the tax year you are paying for in the memo field. This helps ensure your IRS account is credited with the payment.
6. Corporations, exempt organizations, partnerships and filers of excise tax returns can file electronically too. Modernized e-File provides options for filing and paying these tax returns. For more information on Modernized e-File, visit the IRS website.