Taxes Tips

When it comes to Taxes, we've been there, done that, now serving 225 tips in 11 categories ranging from Additional Filing Methods to Taxes Overview.

How do I get my tax refunds with efile?

Tax Refunds With Efile

When you have your 2006 income tax return filed electronically, you can choose to receive your tax refund in two ways: check or direct deposit. They are the same methods that are used if you were not to use e-file. There is one distinct advantage of receiving your tax refund by e-filing your taxes, though. That is the timeframe of receiving your tax refund.

If you choose direct deposit as your method of receiving your income tax refund, you can expect to receive your tax return in about two weeks after filing your tax return.

If you choose a paper check as your method of receiving your income tax refund, the IRS states you can expect to receive your tax refund in about three weeks from the time your file your income tax return electronically.

   
How do I prepare for efiling?

Preparing Your Efile Tax Return

When you are ready to begin the process of e-filing your 2006 income tax return, you will need some documents on hand. You will take information from these documents in order to fill out the electronic tax forms. This does not matter if you do it yourself, or take your tax return to someone else to prepare and e-file.

W-2 for your wages, if you are an employee. You also need to have your spouse's W-2.

1099 series. If you received any income where taxes were not withheld, you need to have this tax form ready.

Social Security number. You need to have this number available for both yourself, your spouse, and any dependents that you are claiming on your 2006 income tax return.

Bank account number - if paying income taxes electronically, or you want a direct deposit of a tax refund

Bank routing number - same reasoning as bank account number applies

Receipts for itemized deduction expenses. These will be used to fill out Schedule A on Form 1040.

Receipts and records for other income or expenses you are claiming.

Once you start the e-filing process, you will need non-financial information such as your name, address, spouse name, exemptions claimed, and filing status. Have this information available to make for an easy and quick online filing of your income taxes. This information is needed to properly submit your income tax return to the IRS.

   
What is an electronic signature?

Efiling Signatures

Since you will be (or are thinking about) filing your 2006 income tax return electronically, the subject of how to sign it may have come up. There are two ways in which you can sign your 2006 income tax return.

The first method makes for a truly paperless income tax return. It is when you obtain a PIN (Personal Identification Number) to file your tax return. Your PIN will be any five digits you choose (except all zeros). You can use your PIN whether you file your own e-file return, or if you have a tax preparer file it.

Each tax preparation software program that supports a PIN system will take you through the process of setting this up. Or, your tax professional who e-files your return can also help you.

The other method of electronically signing your income tax return involves not getting a PIN but still filing and submitting your income tax return using e-file. Some taxpayers are not allowed by the IRS to obtain a PIN to file their income tax return. This group of taxpayers includes:

  • Taxpayers under age 16, who have never filed,
  • Taxpayers who filed Form 1040-NR or Form 1040 SS in 2005, or
  • Taxpayers whose Form 1040 requires attachments other than Form W-2, Form W-2G, or Form 1099-R.
So, if you file a Form 1040 with multiple income and deductions, you cannot file using a PIN. You must fill out a Form 8453.

You will be signing your e-file tax return using what is called an electronic signature. This electronic signature is obtained by using a PIN (Personal Identification Number). This number is for your use only, and it will identify you to the online tax preparation software.

   
What are some methods of efiling?

Method of Efiling

E-filing, short for electronic filing, is when you choose to file and submit your income tax return to the IRS through one of the following methods:

  • A tax preparation software program,
  • The computer of a tax preparer, or
  • An online tax preparation service.
Many tax preparation companies offer a tax preparation software program to help taxpayers both prepare and file their income tax returns.

Tax Software Program. A tax preparation software program will usually offer different features to help taxpayers during their tax preparation process. A popular feature of many of these programs is the capability to allow taxpayers to file their taxes online. If it is a good tax software program, this feature will be easy and quick to use. The software program will take you step-by-step through your tax return preparation process. It also will double-check your work as you go along. When something does not match, you will receive an error message. Upon correcting the information, you will be allowed to proceed in the process.

Some tax preparation software programs can be downloaded to your computer from the Internet. These are not the same programs as those that are strictly offered online. A downloaded tax preparation software program is found on an Internet site and downloaded to your personal computer. You do not have to be online to use it. Check around to see what is available.

Tax Preparer. When you take your tax return to a tax preparer, ask if they submit tax returns via e-file. Most tax preparers will offer this service. Many charge a fee. Call and ask beforehand. When you have someone else prepare your tax return for e-filing, you will need to take them the same financial documents as if you were filing with the paper method.

Online. An online tax preparation service is usually found on many of the tax preparation firms websites. You must be online to utilize this service. Whenever you purchase a tax preparation software program, see if this feature is offered. You also can obtain some online tax return filing sites by simply performing an online search. Also, many service providers offer this service through the IRS Free File Alliance program. Check to be certain what the fee is, if any.

   
How do I make tax payments with efile?

Efiling Payments

When you file your income tax return electronically, you will be paying in the same way you would have had you chosen the paper method of filing your income taxes. You can pay via credit card, authorized electronic funds withdrawal, check, or money order.

For payment by credit card, the IRS accepts Visa, Discover, American Express, and MasterCard.

If you want to pay by making an authorized electronic funds withdrawal you need to have a checking or savings account where the funds can be withdrawn. To use this method, you will need to have your bank account and routing number available. You can choose which date you want the funds withdrawn (up to April 16, 2007). A Department of Treasury financial agent does the withdrawal transaction.

Of course, if you pay by check or money order, you must mail your payment into your designated IRS service center. Your check or money order needs to be made out to the United States Treasury. You also need to include IRS Form 1040-V (Payment Voucher).

   
Is Efiling for me?

Is Efiling For You?

As popular and convenient online income tax filing (electronic filing) has become, it is not for everyone. If you meet any of these criteria, you probably will not do well with filing your income taxes online.

  • You are not computer savvy. You do not know what a mouse is (other than the furry kind) and do not care to learn.
  • You do not trust sending information online. Regardless of how secure a site may be, you still do not trust it.
  • You like and prefer the paper method. There is something tried and true about the pen and paper income tax return method.
  • You are not comfortable with the Internet.
  • You do not like computers.
There will always be taxpayers who are skeptical (or do not prefer it) about the electronic filing of income tax returns. That is why the IRS still offers paper return filing. The electronic filing option is offered to taxpayers, not required by the IRS. Do what you are comfortable with.

   
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