You've decided it's finally time to take that big technological tax step. This year, you're e-filing.
You definitely won't be alone. Almost 80 million taxpayers electronically filed returns last year.
It was another e-filing record, and the computer-relayed returns accounted for well more than half of the total 1040s the IRS received in 2007.
Not suprisingly, e-filing comes in two waves: early filers, who generally are getting tax money back and like the speed e-filing offers in getting the refund process going, and taxpayers who wait until just before the April deadline to hit the "enter" key.
In addition to the appeal of more precise time control over your 1040's delivery, electronic filing offers several more attractions. In most cases, the computer filing programs have all the forms you'll need and they are regularly updated. That's particulary important this filing season, because some forms are not yet ready to be filed because of last-minute alternative minimum tax law changes.
In addition, you're taken step-by-step through the filing process. And the electronic calculators make fewer mistakes, as long as you enter in the correct numbers.
But the most appealing e-filing advantage: Your return gets to and is processed by the IRS sooner. The IRS says turnaround on an e-filed return is, generally, less than two weeks. That speed is especially welcome if you're expecting a refund, which the agency says it can get to you in around 10 days if you e-file and have the refund directly deposited.
Even better, there are a variety of ways to electronically submit your return. Here's a look at your e-file options.
Hire a tax professional
The IRS says computer filing through an authorized tax professional has been the core of e-filing since the system debuted in 1986. Paid tax preparers work with clients to complete their returns and then send them electronically to the IRS. Some preparers take care of the whole process, getting the taxpayer's raw data, exploring appropriate tax breaks, filling in the electronic forms and then submitting them. Others let the taxpayer fill out a paper return and then simply transfer that information to the electronic format for filing.
Tax professionals filed more than 57 million returns electronically last year, so it's likely there's an IRS-authorized e-filer in your area. There are many types of tax professionals, so be sure you find the one that suits your tax needs.
If you're comfortable doing your own taxes, you can buy tax software and put it on your computer. This filing segment continues to grow each tax year, with almost 23 million taxpayers e-filing for themselves in 2007. You can either pick up the program at your neighborhood electronics store or department store or go to the company's Web site and download it. These packages promise to save you time, as well as cash. Just make sure you choose software that fits your filing (and computer) situation.
Don't want to clutter up your computer with a program you use just once a year? Go directly to one of the many tax software Web sites and e-file directly online. You will still have to pay for the service, but it's generally cheaper than buying the software and you don't have to worry about working through any glitches that pop up when you load a new program onto your computer. Some people, however, aren't comfortable with their personal tax information floating out there in cyberspace if they can't complete and file their 1040 in one online visit.
Use the Free File Alliance
Each of the three previous e-file options will cost you. But you may be able to file for free if you meet criteria established by the various members of the Free File Alliance, a government/tax software industry partnership created to encourage more e-filers. The 2008 Free File program began Jan. 11 and you can find participating members at the IRS' special Web page. While the Alliance makes it cheap and easy for many taxpayers to file, it's not available to everyone. This year, only individuals with adjusted gross incomes of $54,000 or less can use the free filing option.