How to file your taxes online
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Filing your taxes online is the norm these days. It saves time, and the vast array of tax filing software also makes the process easier for everyone. Filing taxes online can also speed up the time it takes to get your return – from six to eight weeks down to 21 days, according to the IRS.
How to file your taxes online: 3 ways
Filing your taxes online is faster and easier than paper filing. Here are some options to consider as you move through the e-filing process.
1. Do it yourself
If you feel comfortable playing the role of accountant, you can get your own forms from IRS.gov and prepare your own taxes. All the forms and related worksheets can be found on the IRS website, along with instructions.
Depending on how simple or complicated your tax situation is, this process might be very easy for you. Go through the steps to prepare your forms using your tax documents, such as W-2(s) (from your employer showing your income and withheld taxes) or 1099-B (for capital gains). Then file everything yourself on the IRS website. If you owe money, you can pay directly on the IRS website.
2. IRS Free File
IRS Free File gives you the option to file your taxes online for free. It’s the happy medium between doing everything yourself and using tax-preparation software. The IRS works in conjunction with online tax preparation services to help you fill out everything and file online. It’s a free program, so it won’t offer as much assistance as a tax software program.
There are two Free File options based on income levels:
- One for those with an annual income lower than $72,000.
- One for those with an annual income above $72,000.
The first option takes you to an array of options of IRS partner sites for tax filing. This option also includes state tax filing, and provides guided preparation by asking you to answer simple questions with the calculations taken care of by the online service.
In the second option, you will be filling out the forms yourself. Therefore, you need some knowledge of paper tax filing, as there is only basic guidance on calculations. In addition, state tax filing is not included.
3. Tax software programs
Tax software giants such as H&R Block and TurboTax tweak their e-filing options to improve them every year. Today’s tax software programs make e-filing your taxes a breeze, mainly because they use a question-and-answer format that walks you through the process.
While tax software companies offer paid plans with more benefits, most of the big players also offer a version that lets consumers with simple tax returns, such as those without deductions, file federal taxes — and even state taxes — for free. With H&R Block’s 2020 software, for example, a free online version is available for taxpayers reporting basic W-2 income and taking the standard deduction. However, there are versions that require you to pay if you’re a homeowner, a freelancer or a small-business owner who has a more complex tax situation with unique considerations and deductions to consider.
Other major tax preparation software companies offering a free version for the 2021 tax filing season include TaxSlayer, TurboTax and TaxAct. If you intend to pay for a plan, make sure you compare tax preparation providers to see what each plan includes, and how much each costs. The service tiers aren’t always the same, with some offering more assistance and robust protections, such as audit assistance.
Documents you need to file your taxes online
Start by gathering all the required financial paperwork you’ll need to file. This includes any W-2 forms you’ve received from employers you worked for in the past year, as well as any Form 1099s you received for work with clients as a self-employed worker or for miscellaneous income you earned.
Other paperwork you may have and would need for your tax return includes interest you earned on bank accounts (1099-INT), investment income (usually in 1099s), student loan interest paid (1098-E), mortgage statements of interest paid (1098) and information on contributions you’ve made to an IRA (5498) or a health savings account (8889). While you can gather all the required paperwork for your tax return as you move through the e-filing process, collecting this information early can save you time later on.
How to pay your taxes online
The IRS offers an array of Free File options and online forms that enable you to file your federal taxes online for free. Once you access the IRS website, you’ll find that separate forms are available for taxpayers who earned above or below $72,000 within the year. If you know what information goes on your Form 1040, you can type it in and send it — for free — directly to the IRS.
If you use any of the online tax services to prepare your taxes, once your forms are ready, they will direct you on how and where to send money to the IRS if you owe taxes. If your tax service doesn’t point you there, go to the IRS website and select Make a Payment. Pay the amount you calculated on your forms and submit it either directly through the IRS website or through the tax prep service you used.
How filing online impacts your tax refund
Filing your taxes online is instantaneous, unlike mailing a paper tax return which takes time to reach the IRS.
Submit your forms online and you’ll get a notification from the IRS saying that they successfully received it, or an error occurred. If the IRS owes you a tax refund, you can have this direct-deposited into your bank account, or they will mail you a check. The former is quicker and eliminates the risk of your money getting lost in the mail.
When to e-file taxes
Your 2021 tax return is due on April 15, 2022. You have the option to request an extension if you need more time. In order to qualify for an automatic six-month extension on your federal return you first need to file a Form 4868. If you don’t need extra time because you have all the paperwork that you need, you can file your taxes online even before the due date. If you’re expecting a tax refund, this might be especially appealing.
States that don’t allow e-filing for state taxes
All states that charge a state income tax allow you to e-file your state tax return. However, some states don’t allow you to e-file a state-only return; they require you to e-file state and federal taxes together.
According to TaxSlayer, states that don’t allow state-only filing online include:
“If you wish to electronically file any of these state returns, you must e-file your Federal return at the same time,” according to TaxSlayer.
Also, take note: Some states don’t have a state income tax. They include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. If you live in one of these states, you don’t need to file a state tax return at all. In New Hampshire and Tennessee, you only need to file a state tax return if you’re paying taxes on interest and dividend income.