Tips For Online Tax Filing – Try It Free To See If It Benefits You
Millions of American taxpayers take advantage of the online tax filing services each year. A number of online tax vendors are members in the Free File Alliance program, and they are promoted by the Internal Revenue Service with links from their website. This program was devised several years ago to assist low income taxpayers by giving them an opportunity to file their federal tax return free, provided their gross income was within certain levels established by the IRS each year. In addition to the free filing program, many online vendors offer the ability to file just about any type of personal tax return.
If you were to review the various online tax filing vendor websites, you would see that there are only minor differences between each. Some of them offer a certain service free while others may charge for it, but for the most part, they all appear to be competing by pricing certain options differently. Unlike previous years, practically all vendors are offering free 1040EZ return filing for the 2010 tax season and charge varying fees for preparation of a state tax return. As far as the procedure for filing a tax return online, you will find that all vendors offer an easy method that requires you to select a unique user name as well as a password. A valid e-mail address is also required for confirmation purposes.
You can start to enter basic information such as names and address as soon as your identity is confirmed. Again, the majority of the online tax filing programs use a question and answer format to see what type of return will be required. As you respond to the questions with a yes or no answer, the program will determine the tax forms for you to complete such as W-2 or interest and dividend statements. All that you need to do is copy the information from the forms that were mailed to you onto the forms provided in the program, and also names of dependents, if any, and if you itemize deductions, you will enter that information as well.
From your response to the interview questions, and the tax information used in your return, the program is able to do an intricate calculation that will determine if you qualify for any of the many tax credits available. In addition, it will calculate and determine the best method for you to file to have the lowest tax liability. As soon as the calculations are accomplished, you will be provided a screen where you can verify the information submitted and review your tax return.
At this point, you have several options to choose from to pay the fee for preparation of your return. One option is to have the fee deducted from your refund if your vendor permits that, or it can be paid by a credit or debit card. After you decide on the fee payment option, there are two more possible selections that you need to make. If you have a refund due, you can select to have a check mailed to you, or a better option is to have the IRS deposit your refund directly into one of your bank accounts, which is much faster. Should there be a balance due on your return, you can either mail a check to the IRS or you can allow them to charge your credit card instead.
Now comes the time to e-file your tax return to the IRS and also to the state that you live in, if your state has an income tax. You have reviewed the return, paid the tax preparation fee, and printed out a copy of the tax return for your files. You simply click on the e-file button and your return is instantly submitted and in process. In a couple of days, the IRS and the state will acknowledge receipt of the return. Your online tax filing vendor will also store a copy of your return to make next year’s filing easier for you. They utilize file servers that use very high encryption methods to make sure your return is safe.
The procedure for online tax filing will vary among vendors, but is essentially very basic. Some offer other free services while some offer multiple state filing for those who may have income earned in other states, and you will need to consider this when deciding on which software vendor to use. Also review the fees charged for your particular type of return, especially the cost to file a state return which can vary significantly.
The tax code has become very complex, and with the many changes each year, it is usually beneficial for most individuals to take advantage of the online tax filing services. Not only is the cost less than the CPA down the street, but it is just as safe. Most tax preparation firms use the same software that the online vendors use, and the e-filing is the same. If you have any apprehension, take a free trial with one of the online vendors and see if you can do the return. If not, it doesn’t cost you anything but a little of your time. If your return is complicated, and you have doubts that you can file the return online, then by all means take it to a qualified tax preparer.
Want low cost online tax filing plus fast refunds? Gust Lenglet, a financial adviser and tax accountant for many years, highly recommends filing taxes online. Please visit his site and see how you can get a refund in a matter of days, not weeks.