Electronic filing of 1040s
Now that another year has ended, it is good to review the e-file system for 1040 returns. If you have not e-filed yet, you should consider it. To restate the benefits, electronic filing is available for most individual returns, and using electronic filing can have several advantages for individual taxpayers. The main advantages of electronic filing of individual tax returns are better accuracy than is available with paper returns, prompt IRS acknowledgment of receipt of the return, and quicker refunds.
Returns filed electronically are more accurate because senders are alerted within a day or two if there are errors so they can correct them and re-transmit the return. IRS also acknowledges that an electronically filed return has been accepted by creating an acknowledgment file for each electronic return that it transmits back to the return’s sender. This acknowledgement provides some protection should IRS later claim that it never received a return. Another potential advantage not always stated is that e-filing can provide a level of “early warning” in case IRS already thinks it has a return on file for you.
There are two methods available for electronic filing. The first requires you to have a computer, tax preparation software, and access to the internet (e.g. a modem or router). With that method, you prepare your return on your computer and then transmit it to your tax preparer for processing and filing with the IRS. With the second method, your tax preparer can prepare your return and file it with the IRS; no special software or equipment is needed on your part.
Taxpayers who file individual returns electronically can apply their refunds to estimated tax, receive them by check, have them directly deposited into an individual or joint account, or use some combination of these options. Under the electronic filing program, taxpayers can also borrow money based on an anticipated tax refund using a “refund anticipation loan” (RAL). The RAL is a contract between the taxpayer and a lender in which IRS is not involved.
Electronic filing is the quickest way to get refunds. IRS says that a taxpayer using it receives a refund in half the time it takes with a paper return—even faster if Direct Deposit is chosen. IRS doesn’t guarantee a specific date by which a refund will be directly deposited into a taxpayer’s account. But, to get the status of a refund while an electronically filed return is being processed, a taxpayer can go to the IRS Web site, http://www.irs.gov, and look under “Where’s my refund?” To use this service, you need your social security number, filing status (e.g., single, joint), and the exact amount of the refund as it is shown on your return. The service can also be used to track missing refunds.
Should you owe
Balance due returns are also accepted for electronic filing at all IRS service centers that accept electronically filed returns. The balance due return is transmitted in the same manner as a refund return. To pay the balance due on the tax return, you can mail a check separately, authorize a direct debit out of a checking or savings account, or charge the balance due to a MasterCard, VISA Card, Discover Card, or American Express Card by calling a special phone number or using the Internet.
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