The plan for your e-signature PIN

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Signatures are required on every tax return, even those filed electronically. In the early days of e-filing, taxpayers had to mail in a paper signature form before the Internal Revenue Service could process their returns.

Today, however, the phrase “put pen to paper” is becoming obsolete when it comes to both filling out and signing tax forms. Millions of taxpayers file their returns electronically each year and simply “sign” the 1040 on their computer screens by entering a five-digit personal identification number, or PIN, in place of the traditional signature.

Pick your PIN

If you e-file yourself, you can pick your own PIN. The inkless option also is available to taxpayers who e-file with the help of a professional tax preparer.

Generally, any individual who previously filed a Form 1040, 1040A or 1040EZ can file this year’s return using the signature-free system. So can first-time filers who were 16 or older by last Dec. 31. The IRS also will accept e-signatures from filers younger than 16 if the young taxpayers previously submitted a paper return.

Other PIN issues

Here are few other guidelines to keep in mind

  • You can pick any five numbers (except all zeros) as your PIN.
  • There’s no need to call the IRS first or preregister the number with the agency.
  • If you use a tax professional, the preparer will help you select and enter your PIN.
  • If you do your taxes yourself on your home computer, your software will help you select a PIN and then guide you through the electronic signing process when you’re ready to e-file.
  • If you’re married, both you and your spouse must sign using separate PINs, whether you file separately or jointly.
  • Filers of returns for deceased taxpayers also may use the PIN option. In the case of a single taxpayer who died, the person filing the return selects the decedent’s PIN; when a spouse has passed away, the surviving taxpayer uses his or her personal PIN as the lone electronic signature on the joint return.

Avoiding duplicate e-signatures

Some filers shy away from electronic signatures because of concern that the PIN they choose could also be used by another individual since the IRS doesn’t preapprove the selection.

It is true that several people could pick the same signature numerals. But that numeric ID is only one way the IRS verifies that the return is indeed yours.

In addition to entering your PIN, you also must provide your date of birth and the adjusted gross income amount shown on your previous year’s tax return. The IRS will use this amount, along with your birth date, to verify that you are the taxpayer named on the e-filed 1040.

This information also means you don’t have to worry about someone else picking the same five numbers you do. The chances that two taxpayers will have the same PIN, birthday and AGI from the previous year are statistically remote.

For more information on electronic tax options, check out these Bankrate stories on your e-filing options and selecting tax software.

The IRS has more information on picking an e-filing PIN on its Web site.