How E-file Works for Taxpayers

December 29, 2013 by in category Taxes tagged as , with 0 and 0
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For taxpayers in the United States, e-file provides a popular alternative to filing paper tax returns.

The e-file system allows for the electronic submission of documents, so that you can complete a tax return online. It gains popularity every year, with more than 122 million returns filed this way in 2013, accounting for almost 83% of all returns that year. As of June 2011, more than 1 billion U.S. tax returns had been filed electronically.

Advantages and Disadvantages of E-File

Because of its speed and efficiency, e-filing is the new norm for most U.S. taxpayers. There are some limitations to the system, however, and not everyone will want to submit their return electronically.

Some of the advantages of e-file include:

  • Your return is received immediately and you will receive a confirmation.
  • Electronic returns generally have fewer mistakes and do not require extra data entry by the IRS.
  • Tax refunds are generally issued earlier for e-filed returns, as they are transmitted and processed more quickly.
  • If you owe money, e-file opens up more immediate payment options to settle your balance before the payment deadline.
  • You can store all files on your computer, rather than having to keep track of paper files.

    • There are relatively few disadvantages to e-filing, but there are limitations on who can submit electronic returns.

    Paper returns may need to be filed by married couples who file separate returns in community property states, for example, or when you know another taxpayer will be claiming for the same dependent as you on their own return. There are also certain less common tax forms that will not be accepted through the e-file system.

    In each case it is best to check on your individual federal and state tax requirements to confirm whether or not e-file is right for you.

    Where to Prepare Your E-file Tax Return

    Individuals with an annual income of $57,000 or less can use the IRS software Free File to prepare and e-file tax returns at no cost. If you earn more than this and prefer to deal with your own return, there are many online tax services with software that helps you to e-file.

    The IRS website provides a simple search function to find tax professionals in your area by zip code. Paid preparers who file more than 100 returns during the tax year are legally required to submit returns electronically. As this applies to most tax preparers, you may find it difficult to find a professional who is able to complete a paper return on your behalf.

    The opening day to file returns for 2013 taxes, including e-file, is Friday January 31st, 2014. The delay this year is due to the follow-on effects of the government shutdown that occurred in October last year. But taxpayers who plan to e-file can use the Free File software to submit returns from January 17th, where they will be held securely and submitted on opening day.

    E-file works well for most U.S. taxpayers, providing a quick and efficient way to deal with the stress of tax season.

    Sources: http://www.efile.com/efile-tax-return-direct-deposit-statistics/

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