3



900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 · 215.563.0276 · Fax: 856.667.3652

Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

The "Why" and "How-To" Of Filing Taxes Electronically

Accuracy, speed, and security are among the chief benefits of electronically filing your income tax return, reports the New Jersey Society of Certified Public Accountants (NJSCPA). With e-file, there is no need to submit a paper return to the IRS and even payments and refunds can be transmitted electronically.

Why File Electronically
According to the IRS, less than one percent of electronically prepared returns contain errors as compared to roughly 20 percent of paper returns. That's because, in most cases, electronic tax filing software does the math for you and alerts you to potential errors before you file. This greatly reduces the chance of getting an error letter from the IRS.
In a hurry for your refund? You'll get it much faster when you file electronically. Typically, you can expect to receive your refund in approximately three weeks from the acknowledgement date and even sooner when you have your refund credited directly to your bank account.
With e-filings, there's no need to worry about your return getting lost in the mail. In fact, within two business days of receiving your return, the IRS will acknowledge its receipt. And that's not all. If there is an error, it will be bounced back to the transmitter within two days, with an explanation of the rejection reason. This allows you to quickly resolve the error and resubmit. By comparison, the same process for paper returns could take weeks or even months, delaying your refund. And by choosing to have your refund deposited directly to your bank account, you eliminate the concern of having your income tax check lost in the mail or stolen.

How To File Electronically
You have two e-filing choices: you can have a CPA or another professional tax preparer complete your return and submit it electronically or you can prepare the return yourself and arrange to have it submitted to the IRS. To complete the return on your own, you will need a computer, modem, and commercial tax preparation software. You can purchase the software and install it on your computer, or if you prefer, you can download tax preparation software from the Internet and prepare your return offline or use a Web-based system to prepare your return online.
Once your return is completed, you will need to submit it via modem to an authorized e-file provider who takes the file you send, converts it to the IRS-required format, and sends it to the IRS. To find an authorized e-file provider in your area, go to the IRS website at www.irs.gov and click on the e-file icon.

Signing Your Return
The most convenient way for you to "sign" your electronic return is to use a self-selected PIN (personal identification number). With a PIN, there is no paper signature document to send in. You do not need to register the PIN with the IRS, nor do you need to contact the IRS to get it. When you use one of the commercially available tax software packages that support the self-selected PIN option, you will be guided through the process of entering your own PIN. If you use a tax professional, the preparer will help you.
If you choose not to select a PIN, you can simply sign the paper signature document, Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return, and mail it to the IRS.

Paying Up
A CPA can file your return electronically at any time during the filing season and you can authorize the IRS to debit your checking or savings account on April 15. If you prefer, you can mail a check to the IRS by April 15 or pay by credit card. If you choose the credit card option, be aware that you may be charged a convenience fee. Although the IRS does not charge for e-filing, the provider may collect a fee, depending on the specific services you request.

Maintaining A Paper Trail
When you file electronically, you do not need to mail the IRS supporting documents, such as your W-2 or receipts for charitable contributions. However, CPAs caution you to retain your receipts and other supporting documents because you'll need to produce them in the event of an IRS audit. CPAs also recommend that you print a copy of your return for your records.

[Current Money Management] [Business Information] [Home]

Money Management is a weekly column on personal finance distributed by the NJSCPA.

untitled

This site designed and maintained by the Information Technology experts at Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co.

We appreciate comments concerning our website. Contact our webmaster .