Every year as December turns to January millions of Americans have two thoughts circling through their minds, what they will spend their tax refund on and the more dreaded how are they going to do their taxes. Many choose the conventional way of filing and whip out their calculator and pencil, while others head off to an accountant so they can take advantage of all the instant refund offers. However, in recent years more and more people are turning to software or the Internet and the hassle free method of e-filing.
E-filing is the act of electronically transmitting documents from sender to recipient. Rather than paper documents being delivered an electronic version of the same document that would have been mailed is received in a much faster time frame. There are many benefits to e-filing, you receive your refund quicker, your refund can be directly deposited into your bank account and you can also keep track of the status of your return via the Internet. Additionally, the cost of e-filing is typically less expensive than filing with an accountant.
There are a multitude of companies that one can chose from when they decide to e-file. Personally though I prefer Turbo Tax. Turbo Tax has several different options for filing and can be used directly through their Internet site or through purchasing their software by retail. I have used both options in the past and find them both to be extremely efficient and easy to use.
When preparing to start your e-file there are several things you need to do. You should gather any pertinent papers such as last years return, all W-2’s and other related work papers, receipts for any deductible items, receipts for any charitable donations, forms from your mortgage lender stating your interest and points and any other tax forms or related documents. You also may want to have a copy of the social security cards for your self and any of your dependants.
Allowing yourself about an hour to complete your taxes is advisable so you can take your time and answer the questions on the form as accurately as possible. Turbo tax allows you to create an account with them so if for some reason it is necessary for you to take a break you can return later, log-in with you user name and pick-up exactly where you left off. When choosing an online company , this would be an important feature to consider. This also allows you to do your state and federal separately rather than trying to cram it all in to one session. Having an online user account also allows you to log in and check the status of your return while your awaiting your refund.
Recently, I also become aware of a program called Free File that allows certain individuals to e-file for free. This is a program that many companies participate in that allows individuals with a gross income of $52,000. or less to file with them for free. Every company has different requirements for who qualifies to free file with them and some charge for filing state taxes. For more information on this program you can review the IRS web site.
Filing your taxes can be a stressful endeavor, but e-filing can make the whole process go much more smoothly. Generally, you get your refund back quicker and you save time. At the end of the day what could be better then more time and money.