Can You E-File a Federal Return & Mail a State Return?
Today a majority of American taxpayers electronically file federal income tax returns. Federal tax commissioner Douglas H. Shulman wrote in a letter to U.S. taxpayers accompanying the instruction booklet for the 2010 tax year, "that seven out of 10 individual taxpayers now e-file their return." The process began in 1990, when the Internal Revenue Service received and processed the first electronic federal returns. A majority of the states now encourages residents to use the e-file format instead of mailing returns.
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How It Works
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To promote efficiency by reducing the amount of time it requires to sort, prepare and file two separate tax returns, state and federal, the IRS provides a combined e-file system whereby the taxpayer can choose to file state and federal returns simultaneously. According to the IRS, the software separates the required data into a state packet and a federal packet. The IRS further notes that the agency acts as an "electronic post office" for participating states, receiving the data packet from the taxpayer and forwarding it on to the appropriate state agency.
Dual Filing System
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As of January 2011, residents of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming were not subject to state income tax. IRS records updated on November 30, 2010 indicated that of the remainder, 37 states and the District of Columbia, participate in the dual-filing system.
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Benefits of E-file
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The IRS lists several advantages to the taxpayer of using the e-file system to complete both the federal and state tax returns simultaneously. The agency declares that this method results in faster processing and, thus, a faster return on a refund, as well as that electronic filing is more accurate and convenient.
The IRS e-file system is accessible from any Internet-connected computer. In addition, laws require certain paid preparers to e-file all returns they complete. Thus, professional tax preparers, for the most part, will e-file returns unless the taxpayer explicitly requests postal mail, and the preparer can legally comply.
Tax Preparers
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A number of private companies have collaborated with the IRS to permit U.S. taxpayers to use secure online software systems to e-file federal returns as part of the government's Free File tax program. Based on gross income limits, participating companies offer the use of their tax software systems free to qualified taxpayers. In addition, the companies may permit free filing of both federal and state returns. Some provide free federal filing, but charge a nominal fee for a subsequent state return. Thus, some taxpayers may choose to e-file federal returns, but mail state returns.
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