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.

All About Tax Products

Okay – you've heard the old adage a million times, “Nothing is certain but death and taxes”, but how apropos! The best news is that online tax filing sites improve constantly.

Online Tax Filing products walk you through the income and expense reporting for both federal and state taxes. Your answers are calculated and automatically placed into the correct forms fitting your required needs. The bonus parts of this are they double check for errors PLUS make tax saving suggestions!

You then print your return and/or file it electronically. Want to hear more great news? Tax return electronic filing is less expensive in some cases. But be careful - state often has additional filing charges and would you believe - sometimes more expensive than federal!

Track Your Refund

Where's My Refund? is a cool new online tool offered by the IRS that allows you to track the status of your tax refund. Once you file your IRS tax forms, you can use the Where's My Refund? tool to check on the status of your refund. To use Where's My Refund? you will need to provide specific information from your tax return, including your Social Security number, filing status, and your refund amount.

The IRS Application

The design of the IRS e-file application makes electronic tax filing easier to use. This application catches errors during input, ensures completeness of data and validates information already contained in IRS databases, including your taxpayer identification number.

Pay Your Balance By Phone

Starting January 1, 2006, balance due payment on federal forms can be made by credit card by phone or Internet. Integrated e-file and pay options begin on January 13th.

If you're not getting a refund, you can pay your balance due via credit card by calling 1-800-2PAY-TAX (1-800-272-9829) or 1-888-PAY-1040 (1-888-729-1040). You may also pay by using www.PAY1040.com or www.officialpayments.com. Your credit card issuer will charge you a convenience fee based on the amount of the payment, in addition to the fee for using this service. Both systems accept American Express, Discover, MasterCard, and Visa.

Need An Extension? Just ask.

Can't meet the deadline? E-file form 4868 to request an extension of time - there are no restrictions so all taxpayers qualify. Another way is to choose a company who can help file your taxes. There are links to tax filing companies on IRS.gov. By going directly to a company's Web site, there is a chance you may not get the free Electronic Filing service. Remember - you are under no obligation to buy anybody services.

E-Filing stats

More and more Americans are choosing e-file. It is estimated that more than 68 million Americans filed their taxes electronically in 2005. That was about 11 percent more than the year before. The total number for 2006 is expected to grow to almost 135 million - the IRS expects a record number of e-filers this year with taxpayers knowing that e-filing is quick, secure and reliable.

File Online, Get Your Refund Now

By filing taxes online, it's possible you will get your refund in half the time. Not only will it be quicker, but more secure if you have your Federal and State income tax deposited directly into your checking or savings account.

Exempt Organizations Can File Online

Any exempt organization can certainly participate in tax return electronic filing by e-filing their returns through an IRS 990 e-file provider. The 990 series of forms are used by tax-exempt organizations including charities, non-profit and private foundations along with other tax-exempt organizations providing information regarding their programs/activities showing that they are operating in appropriately. Information on these returns is open to the public.

Last Minute Filers: Double-Check!

So, you're a procrastinator - you wait to the very last minute to file your dreaded taxes. If you're one of the last-minute filers, be sure to double-check everything. If your tax return electronic filing had an error in it and was rejected, you may need to e-file an extension.

If your electronic filing return was rejected by the IRS, you might need to file an extension before you start to e-file again. First, determine why your electronic filing was rejected. Some errors, such as misspelled names or mistakes in Social Security numbers or birth dates, can be fixed easily and you can resubmit your return to the IRS.

Electronic Tax Filing Services

For the most part, online electronic tax filing services are beneficial and helpful, but like all things there are some exceptions. To help you decide, here are the top three e-file products:

• CompleteTax – rated 4 stars out of 5: It may not be as well known as TurboTax or TaxCut but it has wonderful multilevel help and gives a deep interview that that tracks both simple and complex tax returns. One hint on this one: you might have to dig into several levels to get specific help.

• TaxCut – rated 4 stars out of 5: This one has “grown up” over the years and evolved into one of the better e-filing programs. It has a FAQ area as well as hyperlinks for explanations. The questions are comprehensive and it has the ability to import data if necessary. TaxCut offers free technical support with live chat help 24 hours a day, 7 days a week, if you get stuck.

• TurboTax for the Web Premier – 5 stars out of 5: This program has been re-vamped to almost perfection by upgrading the guidance while making it simpler to understand and follow. The con to this, yes it is pricey.

Self-Employed? File Online

Even if you are self-employed, you are still eligible for filing taxes online. And if you use a tax professional to prepare your business returns, request IRS e-file for your filing and payment needs including convenient electronic payment options.

Corporate E-Filing

Corporations with assets of $50 million or above and at least 250 returns are required to electronically file their 1120/1120S income tax returns for tax years ending on or after December 31, 2005. After the first effective year, the requirement will affect corporations that have assets of $10 million or more and have at least 250 returns. Although electronic claims filing is required of certain corporations, others may voluntarily convert to electronic claims filing.

Electronic Signatures

There are two electronic signature methods available for taxpayers when you file online. One method is the Self-Select PIN and the other is the Practitioner PIN. The first uses the taxpayer's prior year original Adjusted Gross Income amount and the second uses a completed signature authorization form.

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).

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.