To E-File or Not To E-File - Questions And Answers
Not sure how e-file works or even what it is? You're in good company; many people don't know or understand what e-file is, how it works or why it's in your best interest to take advantage of it. E-file means electronic filing of your tax return, sending your completed income tax return directly from a local computer or website to the IRS computers to be processed. Since 1990 about 1 billion returns have been e-filed.
Why Should I E-File?
E-file is safer and faster than mailing in a paper return. For people expecting a refund e-filing your return and having your refund direct deposited into your bank account means you can have your refund back between 10 days and 2 weeks as opposed to paper filing which can take 6 weeks or more for you to receive your refund. But is it safe? You bet it's safe. Since returns can only be sent to the IRS by authorized e-file providers that use software tested and approved by the IRS your return is completely safe from prying eyes and getting lost in the mail.
How Does My Tax Return Get to The IRS?
Using special tax preparation software either your accountant, CPA or you complete your return and then send it to the IRS via the internet. Your CPA will be authorized by the IRS as an ERO or Electronic Return Organizer which means the IRS know who they are and has approved them to transmit tax returns electronically.
Do I Still Have To Sign My Return?
Yes, and the easiest and most common way to do this is by using an electronic signature and a PIN, Personal Identification Number, similar to the one you use with your ATM card. In most cases your CPA's software will create a Personal Identification Number for you automatically and add it to your return for you. The IRS does require that you sign a Form 8879 authorizing your accountant to e-file your return.
How Can I Be Sure The IRS Got My Return?
A great many people ask, how can I be certain my tax return got to the IRS if it goes directly from computer to computer? The IRS sends a confirmation notice to your accountant usually within 24 hours telling them that they received the return and that it does not have any errors. In the event there are errors on the return the IRS notifies your accountant telling them what needs to be corrected. Either way every return is accounted for.
What If I Owe The Government Money?
In the event your return reflects a balance due you have options about how and when you pay that amount. First it is important to understand that your tax payment is not due until the filing deadline, for most individuals this is April 15th regardless of when you submit your return. So if you have your return done early, for example; February 5th and you owe $1,000. you have until April 15th to make that payment so there is no advantage to waiting until the last minute to do your taxes.
How you pay your tax bill is also a matter of personal choice. There are three basic methods, we'll call two plastic and one paper. The paper option is to mail in a check along with a Form 1040-V postmarked by the filing deadline. The plastic options are online by credit card or electronic funds withdrawal where you provide the IRS with your bank account information and they withdraw the amount due directly from your bank account. No matter which method you select your payment is due by the filing deadline in order to avoid penalties and interest.
What About My State Tax Return?
If you live in one of the thirty-seven states and Washington DC that accept e-file your accountant send your state return via e-file as well.
Does E-File Cost Extra?
The IRS and states that accept e-file do not charge for electronic filing. While some tax preparers may charge a fee for e-file at CPA Tax Center we never charge for electronic filing but that is a choice we make. If your accountant or tax software does charge to e-file the law says the fee can not be based on any numbers in your return. Charging a fee is up to your tax preparer and the fees may vary so be sure to ask in advance what is being charged. However, when it comes to tax preparation software purchased in a store or online be sure to check to see if state e-file is included in the package you are buying.
Why Should I E-File?
E-file is safer and faster than mailing in a paper return. For people expecting a refund e-filing your return and having your refund direct deposited into your bank account means you can have your refund back between 10 days and 2 weeks as opposed to paper filing which can take 6 weeks or more for you to receive your refund. But is it safe? You bet it's safe. Since returns can only be sent to the IRS by authorized e-file providers that use software tested and approved by the IRS your return is completely safe from prying eyes and getting lost in the mail.
How Does My Tax Return Get to The IRS?
Using special tax preparation software either your accountant, CPA or you complete your return and then send it to the IRS via the internet. Your CPA will be authorized by the IRS as an ERO or Electronic Return Organizer which means the IRS know who they are and has approved them to transmit tax returns electronically.
Do I Still Have To Sign My Return?
Yes, and the easiest and most common way to do this is by using an electronic signature and a PIN, Personal Identification Number, similar to the one you use with your ATM card. In most cases your CPA's software will create a Personal Identification Number for you automatically and add it to your return for you. The IRS does require that you sign a Form 8879 authorizing your accountant to e-file your return.
How Can I Be Sure The IRS Got My Return?
A great many people ask, how can I be certain my tax return got to the IRS if it goes directly from computer to computer? The IRS sends a confirmation notice to your accountant usually within 24 hours telling them that they received the return and that it does not have any errors. In the event there are errors on the return the IRS notifies your accountant telling them what needs to be corrected. Either way every return is accounted for.
What If I Owe The Government Money?
In the event your return reflects a balance due you have options about how and when you pay that amount. First it is important to understand that your tax payment is not due until the filing deadline, for most individuals this is April 15th regardless of when you submit your return. So if you have your return done early, for example; February 5th and you owe $1,000. you have until April 15th to make that payment so there is no advantage to waiting until the last minute to do your taxes.
How you pay your tax bill is also a matter of personal choice. There are three basic methods, we'll call two plastic and one paper. The paper option is to mail in a check along with a Form 1040-V postmarked by the filing deadline. The plastic options are online by credit card or electronic funds withdrawal where you provide the IRS with your bank account information and they withdraw the amount due directly from your bank account. No matter which method you select your payment is due by the filing deadline in order to avoid penalties and interest.
What About My State Tax Return?
If you live in one of the thirty-seven states and Washington DC that accept e-file your accountant send your state return via e-file as well.
Does E-File Cost Extra?
The IRS and states that accept e-file do not charge for electronic filing. While some tax preparers may charge a fee for e-file at CPA Tax Center we never charge for electronic filing but that is a choice we make. If your accountant or tax software does charge to e-file the law says the fee can not be based on any numbers in your return. Charging a fee is up to your tax preparer and the fees may vary so be sure to ask in advance what is being charged. However, when it comes to tax preparation software purchased in a store or online be sure to check to see if state e-file is included in the package you are buying.
