Online Tax Filing: Why File Taxes Online?

Online tax filing provides an easy, hassle-free way of filing your taxes. Even if you’ve never filed taxes before, online tax filing will get you through the process, quickly and affordably.

Why file taxes online?
There is little reason to file your taxes the traditional way ever again! With online tax filing, you are guided step by step to ensure that your tax returns are accurate. Help is always available at the click of a button through an interactive system built directly into the program. Because everything is outlined for you, you’ll only need your W2s, 1099s, and other documents to complete your taxes.

Online tax filing makes your life easier. It works with the IRS system, eFile, which electronically files your tax returns. There is no need to worry about missed deadlines because you won’t have to send them by mail. At the end, you only need to click a button to send your tax returns. You can also print out a copy for your records.

With online tax filing, you won’t have to pay a tax accountant’s professional fees to get your taxes filed. Online tax filing is as low as $20, which saves you money. Because online tax filing systems are designed to catch errors, you don’t have to worry about your information being wrong. Also, online tax filing offers deductions tools so you can accurately enter your deductions and maximize your tax refund.

You can also opt to receive your tax refund check via direct deposit. With online tax filing, all you have to do is enter your bank account and routing numbers to request a direct deposit. The best part is that you’ll receive your refund check in half the time. Plus, you can skip the line at the bank and the time it takes for the check to clear.

What do I need to file my taxes online?

Just gather your W2’s, 1099s, receipts, and other necessary documents. All the information you need is contained within these documents. Online tax filing systems will guide you through the documents. Online tax filing allows you to look in the correct area and fill in the number on the online form. You won’t have to worry about reading the wrong box or entering the wrong number. Everything is outlined so you can quickly and easily file your taxes.

Online tax filing programs come equipped with a deduction finder. This ensures that you have fully taken advantage of every available deduction. Just answer yes or no questions and the online tax filing program will guide you to the right deductions. With a system so accurate, there is no need to worry about missed deductions.

The Bottom Line

Online tax filing is the easiest way to file your taxes and offers the best way to pay your taxes and receive your refund check. If you want a hassle-free, easy way to file your taxes, give online tax filing programs a try.

Source : IRS.Gov

Individual e-file Electronic Tax Filing Program Overview

How to e-file your taxes online? It's as easy as 1-2-3 !

Step 1 - Get all your tax information together! - You'll save time and won't have to stop in the middle of preparing your current year tax return to find a missing document. Here's what you'll need :
  • Social Security numbers for yourself, your spouse, and any dependents.
  • Forms W-2 from all employers are required for yourself and your spouse.
  • Forms 1099 for Dividends, Retirement, or other income, or any Forms 1099 with Income Tax Withholding.
  • Receipts for expenses for Itemized Deductions (Schedule A).
  • Receipts and records for other income or expenses.
  • Bank Account numbers (for a fast refund, or to pay electronically).
  • Prior year Adjusted Gross Income amount or prior year PIN if using a Self-Select PIN as your signature.
  • Complete information on what records you need, and how long to keep your records.
Step 2 - Choose the method of e-filing that works for you:
  • Tax Professional
  • Personal Computer
  • Free File
Step 3 - e-file it!
Paid Preparer - If using a Tax Preparer, be sure to take all your information with you, and don't forget to ask for IRS e-file! Use our locater service to find an Authorized IRS e-file Provider nearest you.

Personal Computer - Those filing taxes online, just answer the simple questions in your tax preparation software, and the software will do the rest for you. For faster refunds, or to pay when YOU want to, have your bank account number handy.

Source: IRS.Gov

Another Record-Breaking Number of Taxpayers Choose to Electronically File in 2007

WASHINGTON - The Internal Revenue Service this year received nearly 80 million tax returns through e-file, breaking the record set last year.

The 2007 level is up about 9 percent from the 73 million returns filed for the same period last year. Of the 139.3 million returns filed in 2007, 79.98 million or about 57.4 percent were filed electronically.

"It was another record-breaking year for e-file," said IRS Acting Commissioner Linda E. Stiff. "Paper returns continue to drop year after year. E-file is the safe, accurate way for more and more taxpayers to quickly complete their taxes and get a refund faster."

Since 2001, the number of e-filed returns hasalmost doubled and over the past decade the number of e-filers has increased four-fold.

Year

Returns

Total E-file

Percent E-file

1997

121.5 million

19.2 million

15.8%

1998

123.8 million

24.6 million

19.9%

1999

125.9 million

29.3 million

23.3%

2000

128.4 million

35.4 million

27.6%

2001

131.0 million

40.2 million

30.7%

2002

131.7 million

46.9 million

35.6%

2003

131.6 million

52.9 million

40.2%

2004

132.2 million

61.5 million

46.5%

2005

134.0 million

68.5 million

51.1%

2006

136.1 million

73.3 million

53.8%



More than 22.6 million returns have been e-filed by taxpayers doing their own returns, up from 20.3 million from the same period last year. More than 57.4 million returns were e-filed by tax professionals, up from nearly 52.9 million last year.

Direct Deposit, IRS.gov also Set Records

Meanwhile, more people this year chose to have their tax refunds directly deposited than ever before. For the year to date, the IRS has directly deposited 61.4 million refunds, up 8 percent from last year.

The IRS Web site - IRS.gov - also experienced a record year. The IRS recorded 196.2 million visits to IRS.gov this year, a more than 10 percent increase from the 177.5 million visits for the same period last year.

Free On-Line Electronic Tax Filing Agreement

  • The IRS will have the Consortium web page ready by December 31, 2002. Consortium participants will have submitted their test returns produced by their software to the IRS sufficiently in advance of that date for testing. The IRS will not list on the Consortium web page a Consortium participant whose test returns have not been certified prior to the beginning of the filing season until that participant's test returns have been tested and certified.

  • The Consortium will use its best efforts to assure that Free Services by individual Consortium Participants are performed in accordance with the terms of the Agreement and in accordance with the offer made by the Consortium Participant. If the IRS determines a particular offering of Free Services is deficient or that Free Services are not being properly performed, it will notify the Consortium in writing of that fact, and provide information regarding corrective actions it believes are needed.

  • The undertaking by the Consortium under IV. A to offer Free Services at or above the 60% level shall apply only to January through April of each year (the primary tax filing season). Outside of the primary tax filing season, the Consortium shall encourage Consortium members to offer Free Services to the same extent that such services are offered by Consortium members for compensation.

  • The Consortium will be responsible for establishing its governance standards. These standards shall be in accord with applicable law and regulations. The standards shall be consistent with the Consortium performing its obligations under this Agreement and be designed to maximize participation of industry members while meeting the requirements of the Agreement.

  • IRS, in consultation with the Consortium, will develop an assessment process including usability performance measures to measure the extent to which the Agreement is accomplishing the objectives described in I., above. They will include at least:
    • Uptime and reliability through the tax season.
    • Delivery of the taxpayer to the Free Services in the minimum number of clicks consistent with usability design principles and the need to fully inform taxpayers about the free online services. From the site the taxpayer arrives at by clicking on the Consortium page's link to the Consortium Participant, until the taxpayer arrives at the Free Services, there will be no more clicks than required of such Consortium Participant's paying customers, if applicable, consistent with usability design principles.
source:irs.gov

Tax e-filing Options for Individuals.

Choose the method of e-filing that works for you.

Tax Professional
If you choose a tax professional to prepare your return, be sure to ask for IRS e-file. When your preparer electronically files your income tax return, you don't have to worry if the mail gets through. And, IRS e-file is so accurate that you are 99% less likely to receive subsequent correspondence from the IRS. e-file delivers a fast refund, in as little as 10 days with Direct Deposit. Keep in mind there may be fees associated with tax preparation. In addition, some tax preparers may charge a fee to provide IRS e-file.

More than 57 million returns were e-filed by tax professionals during 2007. To find a tax professional that offers IRS e-file in your area, use our Authorized IRS e-file Provider Locator Service or check our e-file Provider page.

Personal Computer
A computer with a modem or Internet access and tax preparation software are all you need to DIY (do-it-yourself). Best of all, you can e-file from the comfort of your home 24 hours a day, 7 days a week. In 2007, over 22 million returns were e-filed from home computers. For more information on using a personal computer and a list of IRS-tested and -approved software companies, see e-file Using a Computer.

Free File
Are you interested in preparing and e-filing your federal income tax return for free? Millions of taxpayers are eligible to use Free File. To see if you are eligible and to learn more about these free online company services, please visit our Free File page. Commercial tax software companies provide these online Free File services.

Source: irs.gov

2007 Filing Season Kicks Off with New Features, Extended Tax Breaks; Tax Forms in Mail This Week

WASHINGTON - The Internal Revenue Service today began a busy 2007 filing season that features telephone excise tax refunds, a new refund deposit feature and recently enacted tax breaks that may require extra attention from taxpayers.

"Taxpayers will have a number of new tax benefits and features available this year," IRS Commissioner Mark W. Everson said. "We encourage taxpayers to take a few minutes to review these changes, particularly those involving the recently enacted tax law provisions. The IRS will do everything it can to minimize the impact on taxpayers."

This week, the agency is sending 17 million 1040 tax packages for 2006 to taxpayers who have previously filed paper returns. The number of paper tax booklets being mailed to Americans continues to decline as more people opt for electronic filing. The IRS expects to process about 136 million individual tax returns for 2006, with more than half of those filed electronically.

Among the major changes taking place this year:

Telephone Excise Tax Refund. Individual taxpayers will be able to request a refund if they paid the federal excise tax on long-distance or bundled service. The government stopped collecting the federal excise tax on long-distance service in August and announced plans to provide refunds of these taxes billed after Feb. 28, 2003, and before Aug. 1, 2006. More than 146 million individual taxpayers are expected to request the refund.

To request the refunds, taxpayers have several options:
  • Individual taxpayers can request the refund by using the standard amounts, which are based on the total number of exemptions claimed on the 2006 federal income tax return. Choosing the standard amount saves taxpayers the time and trouble of digging through 41 months of old phone bills. The standard amounts are $30 for a person filing a return with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions. For example, a married couple filing a joint return with two dependent children (for a total of four exemptions) will be eligible for the maximum standard amount of $60. To get the standard amount, eligible individual taxpayers will fill out an additional line on their regular 2006 1040 return. (Line 71 on Form 1040; Line 42 on Form 1040A; Line 9 on Form 1040EZ.)

  • Alternatively, individual taxpayers who want to request a refund of the actual amount of tax paid should figure that amount using Form 8913 and report it on their income tax return.

  • Businesses and tax-exempt organizations can also request a refund under a different procedure; more information is available at IRS.gov.


  • New 1040EZ-T Form. For people who don't need to file a regular tax return, the IRS has developed a special, shorter form to allow them to request the telephone refund. Copies of the Form 1040EZ-T will be available on IRS.gov, over the phone and at a variety of other locations. The IRS encourages people who qualify for the 1040EZ-T to file electronically through the Free File program, which will be available for free beginning later this month. More than 10 million taxpayers who aren't normally required to file a tax return may be able to use this new form. Taxpayers can either request the standard amount on this form or attach a Form 8913 to request actual amounts.

    Recent Tax Law Enactments. The IRS is taking a number of steps to help taxpayers get the information they need to take advantage of tax law provisions enacted in December after IRS forms went to print.

    This new legislation affects a number of areas of tax law, but the most significant effect on individual taxpayers involves the deductions for state and local sales tax, higher education tuition and fees, and educator expenses.

    Taxpayers can visit IRS.gov for updated information on the late legislation. The IRS will conduct a special mailing of Publication 600, which will include the state and local sales tax tables and instructions for claiming the sales tax deduction on Schedule A (Form 1040), to 6 million taxpayers who also receive the 2006 Form 1040 package this month.

    For taxpayers using a paper Form 1040, they will have to follow special instructions if they are claiming any of the three deductions. The key paper 1040 Forms went to print in November, so taxpayers will have to make special notations to claim the deductions if they use these paper forms. Specific details are available on IRS.gov. For people using IRS e-file or Free File, tax software will be updated to include the three key tax provisions, and e-file will get the refunds to taxpayers faster than paper returns.

    "As we always do, we encourage taxpayers who think they may claim these deductions to file electronically," Everson said. "They will get their refunds faster through e-file. Even more importantly, e-file will greatly reduce the chances for making an error compared to claiming the deductions on the paper 1040."

    The IRS will not be able to process tax returns claiming any extender-related deductions until early February. All other returns can be filed and processed as normal. Whether claiming an extender provision or not, the IRS notes that using IRS e-file is the most accurate way to file any return and the quickest way for taxpayers to receive their refunds. Based on filings last year, only about 930,000 tax returns claimed any of the three extender provisions by Feb. 1.

    New Split Refund Option. For the first time, taxpayers can split their refunds among up to three accounts held by up to three different U.S.financial institutions, such as banks, mutual funds, brokerage firms or credit unions. To split their direct-deposit refunds among two or three different accounts or financial institutions, taxpayers should complete the new Form 8888, Direct Deposit of Refund to More Than One Account. Taxpayers can also continue to use the direct deposit line on the Forms 1040 to electronically send their refunds to one account.

    Free File Improvements. The free electronic filing program begins later this month featuring improvements to benefit the 95 million taxpayers - 70 percent of all taxpayers - who qualify for the program. Free File, a partnership between the IRS and the private sector Free File Alliance, is available for taxpayers who earn $52,000 or less. This year, the program features an agreement by private sector partners to remove Refund Anticipation Loans (RALs) as well as other ancillary offerings from the program.

    Given the large number of changes this year, there are several easy options for taxpayers to turn to for help. IRS.gov will have information on all the tax changes and new features this year. Key features include:

    1040 Central. This is a one-stop online shop for people hunting key forms, looking for what's new in the tax code and answers to frequently asked questions.

    Where's My Refund? Once taxpayers file their tax return, they can track their refund through the online tool "Where's My Refund?" at IRS.gov. Taxpayers will need some of the exact information from their tax return in order to use the tool. Access this secure Web site to find out if the IRS has processed the tax return and sent the refund.

    Filing electronically will prevent problems for many taxpayers sorting through this year's changes. With IRS e-file, taxpayers can get their refunds in half the time of filing a paper tax return and receiving a refund check, even faster with direct deposit. IRS computers also quickly and automatically check for errors or other missing information, making e-filed returns more accurate and reducing the chance of getting an error letter from the IRS.

    "With all the changes taking place, this is a good year for paper filers to try e-file," Everson said. "We remind taxpayers that e-filing is fast, secure and reliable."

    Taxpayers consistently give high marks to e-file in satisfaction surveys. E-file ranks as one of the government's most popular programs, according to the American Customer Satisfaction Index. And in a survey of users of Free File, 97 percent said they would recommend it to others.

    source : irs.gov

    Best Online Tax Filing

    WASHINGTON - The Internal Revenue Service reminds members of the military to take advantage of Free File. which allows taxpayers to prepare and e-file their federal income tax return online for free. Taxpayers who have an adjusted gross income of $52.000 or less in 2006 are eligible.

    Available only through this Web site. Free File is fast. easy and safe to use. It is available in English and Spanish. The program can be accessed from any computer that is connected to the Internet. making it especially convenient for those stationed abroad. It can be accessed 24 hours a day. seven days a week. Free File returns are transmitted using secure technologies.

    To start. first go to the home page of this Web site and click on "Free File". then press the "Start Now" button. Then. either review the list of tax preparation company offerings to select a vendor or click the "Guide Me to a Company" button. Free File is not available by going directly to a company's Web site. Once a company has been selected. follow the link to its Web site and begin preparing the return.

    In addition to saving money. Free File users enjoy other benefits. Preparing taxes electronically saves time. That's because the software features an instructive interview process that guides users through preparing their return. helps answer their questions and informs them of the newest tax breaks. such as this year's one-time refund of the excise tax on long-distance telephone service.

    Some of the Free File Alliance companies also offer free preparation and filing of state income tax returns and filing of time extensions. Some also offer no-cost online filing of Form 1040EZ-T. Telephone Excise Tax Refund. for those who want to request the refund and are not required to file a federal income tax return.

    The IRS automatically extends the deadline for filing tax returns. paying taxes. filing claims for refunds and taking other actions related to federal income tax for U.S. Armed Forces personnel serving in a combat zone. The IRS also extends the deadline for those in the U.S. Armed Forces deployed overseas away from their permanent duty station in support of operations in a qualified hazardous duty area but who are outside that area. Taxpayers who get deadline extensions can use Free File to later file their returns through mid-October 2007.

    When taxpayers e-file their returns through Free File. refunds come faster: in half the time. For example. when you use Free File and choose to receive your refund with Direct Deposit. you will receive your refund in as little as 10 days. That's because e-file returns are easier and quicker for the IRS to process.

    Many members of the U.S. Armed Forces are eligible for the Earned Income Tax Credit. and Free File automatically calculates the EITC for them. EITC is a refundable federal tax credit intended to offset taxes paid by low-income workers. It is one of the most successful tax credit programs. helping lift millions of working Americans above the poverty level.

    The Working Families Tax Relief Act of 2004 and the Gulf Opportunity Zone Act of 2005 give military personnel the option of treating excludable combat pay. but not the basic allowance for housing or basic allowance for subsistence. as earned income for purposes of the EITC. This could help military personnel avoid a situation in which the military pay exclusion leaves them with no earned income and thus no EITC. Under this provision. military personnel may opt to include all or none of their combat pay. but not just part of it. when calculating their EITC.

    Free File is offered by the IRS in partnership with the Free File Alliance. a group of leading private-sector tax preparation companies. Free File has been around for the past five years. It was created to give a majority of U.S. taxpayers a no-cost way to prepare and e-file their annual federal tax returns.

    A recent survey found that the majority of users like the program. Of those surveyed. 96 percent said they found Free File "easy to use." and 97 percent said they would recommend it to others.

    If military members have questions. they should call or visit their nearest military tax preparation office (Volunteer Income Tax Assistance office).

    Source: irs.gov