Information on E-Filing Tax Returns

E-filing stands for "electronic tax filing," which is a procedure for filing tax returns through the Internet that typically does not require submission of any paper documents. Individual taxpayers and businesses both can e-file tax returns. Federal tax returns can be e-filed, and several states offer e-filing as well.

History

The Internal Revenue Service (IRS) began offering tax return e-filing (refund-only) in 1986. Twenty-five thousand individuals from three sites (Phoenix, Arizona; Raleigh-Durham, North Carolina; and Cincinnati, Ohio) used it. Some business tax returns were added in 1987, and there were 48 districts added by 1989. The e-filing program accepted "balance due" returns in 1990, and South Carolina was the first state tax return accepted in 1991. Home e-filing started in 1992 with a test program in Ohio. The Electronic Federal Tax Payment System (EFTPS) allowed individual taxpayers (and some businesses) to make payments electronically in 1996, and it has been improved and enhanced since then. By 2003, 37 states were included in the program, and more than 53 million tax returns were filed by individuals.

Significance

E-filing tax returns began to lessen mistakes, cut down on paper usage and to decrease IRS operating expenses. This method of filing tax returns has been improved and expanded since its inception to permit additional taxpayers to use it. E-filing can be used to file most all individual and business tax returns. It can also be used to make a payment for taxes due, request a tax refund or request an extension. It is the quickest method to use, and tax refunds are received twice as quickly.

Documents

E-filing requires certain documents to complete the process. This includes Social Security numbers of all filers and dependents claimed, all W-2 forms received from employers, any Form 1099 (retirement, other income, dividends and other) and every receipt for income and expenses, including Schedule A itemized deductions. Filers may also need bank account and routing numbers for automatic deposit or to pay taxes due in addition to last year's adjusted gross income (AGI) figure to use as a signature.

Methods

E-filing can be completed employing different methods. Each technique uses specifically designed software to assist in filing tax returns electronically. Taxes overpaid (or due) are figured using a series of questions created for this purpose. Answering the questions determines what forms, documents and amounts are needed. These programs are accessible to taxpayers online, for purchase in stores or through tax experts. E-filing is available for free to certain taxpayers or for a fee to do it yourself or have it done by tax professionals.

Considerations

Check the IRS website for a listing of places to e-file your tax return. These are divided among the various types of filing (individual, business, corporate, charities and so on). Read the information provided to see if you qualify for free e-filing. Using e-file to file your tax returns will ensure all required forms are completed and no errors exist on your return. You will also get a confirmation within 48 hours of acceptance of your tax return from the IRS and a faster refund.

Resources

• IRS: E-file Options
• E-File Information