How to file your taxes online

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Mailing a paper tax return is becoming a thing of the past as more people choose to file their taxes online.

Filing your taxes online lets you access an array of powerful tax preparation software programs that streamline the process and may even help you get a larger refund. It can be significantly faster, too. People who e-file their taxes will likely receive their refund within 21 days, according to the IRS.

How to file your taxes online: 3 ways

There are plenty of tools available that can help expedite the process. 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 the IRS at 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 complicated your taxes are, this process might be very easy for you. Go through the steps of preparing your forms using your tax documents, such as W-2s or 1099-B for capital gains, and then file everything independently on the IRS website. If you owe money, you can pay directly on the IRS website as well.

2. IRS Free File

If you’re wondering how to file taxes online for free, IRS Free File gives you that option. The happy medium between doing everything yourself and using a tax software is to use an IRS Free File program. The IRS works in conjunction with these online tax preparation services to help you fill everything out and file online. Bonus: It’s a free program to use but it won’t offer quite as much assistance as a tax software program. There are different options based on your income.

3. Tax software programs

Tax software giants like H&R Block and TurboTax tweak their e-filing options and make them better every year. Today’s tax software programs make e-filing your taxes a breeze, mostly 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 — and potentially even state taxes — file 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 paid versions 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 2020 tax filing season include TaxSlayer, TurboTax and TaxAct. If you intend to pay for a plan, make sure you compare tax preparation companies to see what they include and charge for each tier of service they offer. Their services aren’t always the same, with some offering more assistance and robust protections, like 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 last year, as well as any 1099s you received for work with clients as a self-employed worker or for miscellaneous income you earned.

Other paperwork you may need to gather might include details on interest you earned on bank accounts, investment income, student loan interest paid, mortgage statements and information on contributions you’ve made to an IRA or a health savings account (HSA). 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 make filing your federal taxes for free a real possibility. 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.

You can also use a variety of online tax services to prepare your taxes and once your forms are ready, they will most likely direct you where to send money to the IRS. If your tax service doesn’t point you there, go to the IRS website and select Make a Payment. Pay whatever amount you came up with on your forms and submit those either directly through the IRS website or through the tax prep service you used.

How filing online impacts your tax refund

The best part about filing your taxes online is that you’re not relying on physical mail, which means the whole process is quicker. You can submit your forms online and get a notification from the IRS when your return has been received or if there’s an issue. Also, if you’re expecting a refund and you set it up for direct deposit, it also generally shows up pretty quickly in your bank account. This also lowers the chances of anything getting lost in the mail.

When to e-file taxes

Your tax return is due on April 15, 2021. However, you do have the option to request an extension if you need more time. The IRS notes that you need to file Form 4868 in order to qualify for an automatic six-month extension on your federal return.

Other than that, you can e-file your taxes whenever you’re ready and have all the required paperwork you’ll need.

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 do not allow you to e-file a state-only return, meaning they require you to e-file state and federal taxes together.

According to TaxSlayer, states that do not allow state-only filing online include:

  • Alabama.
  • Arizona.
  • Arkansas.
  • Kansas.
  • Michigan.
  • Mississippi.
  • Oklahoma.
  • Oregon.

“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 note that some states don’t have a state income tax including Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. If you live in one of these states, you do not 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.