If you don’t understand what e-file is, how it works or why you should do it you are not alone. Most people are in the same boat as you. The “E” in e-file stands for electronic which means your tax return is sent directly to the IRS. According to the IRS about 1 billion tax returns have been e-filed since 1990.
Is E-File Safe?
Not only is e-file safe it’s fast too. Individuals who e-file their federal income tax return and are expecting a refund receive that refund in between 10 days and 2 weeks. Paper filers wait up to 6 weeks for their refunds. Since your return can only be transmitted to the IRS by an authorized e-file provider using software that the IRS has tested and approved your return is completely safe.
How Does E-File Work?
Either you or your tax professional, such as a CPA prepare your tax return using special tax preparation software and once complete transmit it to the IRS over the internet. Your accountant, as an Electronic Return Organizer (ERO) is authorized by the IRS to file your return electronically. Along with your return your accountant also sends the IRS their name, address and ERO number identifying them as authorized e-file providers to the IRS.
How Do I Sign My Return?
The easiest and most common way is by using something called an electronic signature and a Personal Identification Number or PIN making the filing process totally paper free. More often then not your CPAs tax preparation software will create a PIN for you automatically and attach it to your return before filing. You do still have to sign the IRS Form 8879 giving permission to your accountant to electronically file your return.
How Do I Know The IRS Got My Return?
A major concern many people have is that they worry about their tax return disappearing into the black hole of cyber-space never to been seen or heard from again until they receive a threatening letter from the IRS informing them that they have not filed a return. There is no need for fear, usually within 24 hours and almost never more then 48 hours the IRS sends a message to the transmitter (your accountant) either accepting the return or telling them that there are errors which must be corrected. In either case the process is transparent and foolproof ensuring that every return is accounted for.
What Happens if I Owe Money?
As with all tax returns, whether you owe money or are getting a refund they can be filed anytime. Unlike refunds where the sooner you file the sooner you get your refund when you owe your payment is not due until the filing deadline, usually April 15th, so there is no benefit to putting off preparing your return until the last minute.
In the event you have a tax liability, you owe the government money; you have options when it comes to making your payment. Just like the supermarket you can choose between paper and plastic (credit card or electronic funds withdrawal). Payments made electronically can be done 7 days a week 24 hours a day with the help of your accountant or directly on the IRS website, IRS.gov. If you prefer you can make your payment by check or money order using IRS Form 1040-V. No matter which method of payment you choose the deadline is April 15th if you want to avoid late payment penalties and interest charges.
Can I E-File My State Return?
Currently 37 states and Washington DC accept e-filed returns. Your accountant can tell you if your state accepts e-filed returns. 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.
Is There a Charge For E-File?
The IRS does not charge for electronic filing. That does not mean that all e-file providers do not charge a fee as it is entirely up to them. 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 a fee to e-file that fee can not be based on any figures in the tax return. Since charging fee is up to the individual tax preparer the fees may vary and you should be sure to have an understanding of what is being charged.