Benefits of E-Filing

Posted By: Dr. Frugal in Taxes on 08/24/2007 at 07:07:48

This will by my last entry on taxes for a while for the simple reason that I don't like to think about taxes any more than I have to. Once a year is plenty for me.

The IRS and many state tax authorities are pushing electronic filing of tax returns. It helps them with processing and will usually get your refund to you more quickly if you are owed one. All three tax preparation software packages that I've covered this week offer electronic filing, although they each handle it a little bit differently. Once you have completed your return, you access the electronic filing option and follow the instructions.

Although there may be a fee for this service, it is worth the money if you have a refund coming. The IRS reports that e-filers receive their refunds significantly faster than the paper filers do (2-3 weeks vs. 4-6 weeks). How much faster depends on how early you file, the complexity of your return, and the completeness of your filing.

If you owe money, you may question the wisdom of spending even more money to get your return there faster. However, some benefits still apply even if you owe money: if you want to make sure your mailed return gets to the IRS you need to send it via certified mail with a return receipt requested. By the time you have paid for those extra services, you may have exceeded the cost of e-filing. Also, if you owe money, you can use an electronic funds withdrawal from your checking or savings account, pay by credit card, or register to the the Electronic Federal Tax Payment System (EFTPS). Finally, when you e-file you receive a notification from the IRS that your return is safely in their system. And that's some peace of mind we could all use.


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