Barbara Weltman.com

J.K. Lasser’s Online Taxes

"A fast, accurate, easy way to file your taxes The best guide to making tax season and year round planning easier and cheaper is finally here! With a growing number of taxpayers filing online and the recently passed Economic Growth and Tax Relief Reconciliation Act of 2001, J.K. Lasser's Online Taxes is the perfect answer for all your online tax filing questions. Whether you're a beginner or experienced online tax filer, this practical guide provides accessible information regarding the best tax resources on the Internet, including the IRS web site. You will also learn how online tax tools offer practical tax strategies and advice at a fraction of what a consultant would cost. With step-by-step instructions on how to file electronically and helpful tips on the new tax law, this book makes filing your taxes simple. J.K. Lasser's Online Taxes will make April 15th seem like just another day."

Advantages of Online Filing.

You don't have to file your return electronically. There's no law mandating electronic filing. You can still file a paper return - through the U. S. Postal Service or by means of a private carrier such as FedEx. But using e-file to submit individual income tax returns electronically offers several unique advantages ofver traditional paper returns sent though the mailor private carriers.

Ease of Filing.

Those using their home computers can file returns with the IRS 24 hours a day seven days a week. No more long lines at the post office on April 15th. Those who lack transportation don't have to leave home to file their returns.

Filing electronically is simple to do yourself - once you know how. Alternatively, if you don't have Internet access or still feel intimidated by doing it yourslef or just don't want to do it yourslef, you can use the services of a paid preparer who will submit your return for you - for a fee (generally between $24 and $50, depending on your location and the complexity of your return.)

There are now combination tax return preparation and electronic filing sites on the Internet that allow you both to prepare and file at one location. The great thing about this arrangement is that there's no software to purchase or download - you work directly through the Web. And the process may be entirely free in some circumstances. Even if you're required to pay, you only do so at the end of the process - when you file your return. For example, at TurboTax for the Web, your return can practically prepare itself. This site can automatically retreive your W-2 information about your wages and 1099 information about certain investments if your employer and financial institutions participate in the Turbotax program. Other online preparation/filing sites boast that it can take under an hour to prepare and file your return - something that used to take hours doing the old-fashioned way.

And you can file your federal and state income tax returns in one step - both returns are usually e-filed with the IRS who, acting as an "electronic postman", then forwards the state return on to the appropriate state agency. In some states the transmitter routes the state return directly to the state agency instead of through the IRS. From the consumer's perspective, regardless of the technical way in which the state receives its return, the two returns - federal and state - are filed together, simplifying the filing process.

Accuracy.

Filing electronically assures the return you submit to the IRS contains all essential information necessary for processing. If something is missing or incorrect - for example, a dependent's Social Security number - the return is immediately rejected. This allows you to promptly correct the error and resubmit the return.

Software companies continually monitor their products for errors. You can download program updates to avoid any problems. TurboTax stands behind its product 100% by agreeing to pay any penalty charged as a result of calculation errors in its program. Other software companies have similar guarantees.

Of course, assurance of the accuracy on your return depends on the information you provide. For example, if you fail to include dividend income you received, the math on your return will be accurate, but the information is not correct. Only you, and not a computer program, can make sure that the information reported on the return is complete and correct.

Quicker Refunds.

If you've overpaid your income taxes - because there was too much withholding from your wages or overly generous estimates tax payments - you can receive a refund more rapidly by e-filing. It's estimated that refunds on paper returns take an average of six to eight weeks - even longer for returns filed around April 15th. But refunds on e-filed. retunrs typically are made as quickly as two weeks from the date on which the return has been accepted by the IRS.

You can receive your refund even quicker - a couple of days instead of a couple of weeks - through a refund anticipation loan. This may be called a "Refund Advance" of some other term. But whatever it's called, it's really just a short term loan that's being made to you. Intuit (TurboTax), H & R Block (TaxCut), and other companies work with banks to provide taxpayer refund anticipation loans up to $5000 that put the funds into taxpayer bank accounts within two or three days of filing. There are no upfront costs for this loan - the loan origination fees are subtracted from the loan proceeds (your refund) that are deposited in your account.

While there are no up-front costs, there are fees for this quick refund method and these fees can be relatively sizable. Except in unusual circumstances, you should not use this method of receiving your refund because of the costs involved. By simply waiting a few weeks, you receive all of your money from teh U.S. Treasury and you don't incur any loan origination fees in the process.

Acknowledgment.

Proof of filing is important for several reasons. It assures you that any refund due you is in progress - you can anticipate its receipt to pay your bills, plan a vacation, or make an investment.

Proof that a return has been filed is also important in establishing a statute of limitations - the time in which the IRS can audit your return. If the IRS says that no return has been filed and you lack proof to the contrary, than the IRS has an unlimited time to question your return and claim you owe back taxes - whether or not you agree.

When filing a paper return, you can have proof that your return was filed by obtaining a registered or certified receipt from the U.S. Postal Service showing when the return was mailed. Proof of filing can also be a receipt from an authorized private delivery carrier.

Filing a paper return in this manner - through the post office or an authorized private carrier - means that the return is treated as filed when it is mailed (rather than on the date it is delivered). The costs for receipts from the post office or service from a private carrier can be a couple of dollars or more - depending on the size of your return and the delivery method you select.

But with e-filing the IRS provides proof withing 48 hours of submission that the return has been received - at no additional cost to you. You receive acknowledgment in the form of an electronic date and time stamp receipt for the acceptance of your treurn. Once Issued, the IRS cannot come back later on to claim it never received your return.

You can find out about e-filing your federal income tax return as well as e-filing other federal returns at the IRS web site (www.irs.gov).

Copyright ©2003-2008 Barbara Weltman