Filing taxes online does not always require one to buy online tax filing software. Some companies allow the filer to utilize an online website that is connected to their own databases. In a nutshell, filing taxes online involves transferring tax information to the Internal Revenue Service (IRS) just like the paper filing method.
An important difference between the two methods is that digitally transferring tax information to the IRS is electronic and done via the internet. Both federal and state taxes can be filed online.
To file the taxes online can be done in more than one way i.e. either directly on to the tax filing software application or on paper first and then onto the software. The online method may not necessarily be faster during the submission phase, but is often processed faster once it is uploaded. E-filing can really be as easy as 1,2,3 and 4 if one chooses to follow the steps listed below:
(1) Obtain all the paperwork first to avoid frustration half way through the filing process. W-2's, 1099 interest statements, receipts, banking information etc. are a few of the documents that are often needed.
(2) If one is a perfectionist consider filling out a paper tax return first then transferring the data onto the electronic return for good measure. This may be helpful when filling out schedule D's and itemized deductions, and when researching which tax forms are needed.
(3) Enter information into the software and sign the electronic tax return.
(4) Submit the tax return through the E-filer to the IRS. The software does all the adding up practically guaranteeing all the numbers entered will add up or the software will point out it needs to be corrected before it can be submitted.
Online tax filing tips and benefits
Filing taxes online can have several benefits, but being familiar with the process can help make the benefits more realizable. The first time one files taxes online may be a little slower than sub-sequent tax filings due to the learning curve and acclimation with the process. Online E-filing sites often have software that simplifies the process by asking questions required by the IRS so one doesn't have to figure out what is needed.
Visiting the IRS website and the E-filing website and taking some time to review and understand them may help avoid obstacles later in the process. For example, the signature at the end of the E-filing might take some E-filers by surprise if they don't have the necessary information to sign electronically.
• Faster return: Returns can be processed and in your bank account within 2 weeks.
• Accurate: The mathematical ability of the software double checks for math errors.
• Reputable: Mortgage companies, auditors and banks all prefer tax filers who go through tax preparation
• Inexpensive: Filing federal taxes online can sometimes be free depending on one's financial situation and which company is used.
Some online filers require a fee around $35.00 for State tax filings. There are several filing plans out there so be sure to shop around first. A list of companies that work with the U.S. Internal Revenue Service (IRS) can be found at the IRS website by clicking on the e-file link and following the instructions. is quite helpful in informing a potential e-filer about the process. The site reviews commonly asked questions, tax related questions about e-filing, and recommends e-filing programs. Two reputable online tax filing services are the following:
(i) H&R Block: This is a pretty good service. The tax return is encrypted, professional and doesn't always require the tax filer to buy software because it can be filed on their online application. The return begins processing as soon as the math check is complete and the forms submitted. A lot of the data from the federal return may be automatically transferred to the state return for you.
(ii) Turbo Tax: Turbo Tax has been around for a while and has a well developed software program that can allow one to start entering available information at home whenever they want. This can help one get a head start on fine tuning the tax return before being sent to the IRS.
Summary
Filing taxes online is an alternative to paper filing. In the process of e-filing tax information is gathered and transferred using an online or pre-purchased tax software. The data is checked for accuracy by the software and is then sent to the IRS for processing. There are several benefits and venues available with E-filing taxes.
Keep in mind an electronic signature is needed at the end of the process. This may be the previous year's Adjusted Gross Income, or a pin code obtained via the IRS. A list of e-filing websites can also be found at the IRS website along with information and instructions about the e-filing process.
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