Tax software vendors provide online tax filing opportunities that millions of American taxpayers take advantage of every year. These services are further promoted by the Internal Revenue Service who posts links on their website for those software vendors that are a part of the Free File Alliance program. The IRS began this program several years ago to offer free federal return filing for those taxpayers that had low gross income that didn't exceed certain limits established by the IRS each year. A review of many online tax filing vendors indicated that any type of personal tax return can be prepared online.
All of the vendor online tax filing websites pretty much function about the same, some just offer more bells and whistles, and most try to compete in price by offering various extra services. For the 2010 tax filing season, almost all of the vendors are offering free filing for the federal 1040EZ return and are only charging to file the state return. The procedure for filing your tax return online is fairly simple and begins by deciding on a username and a secure password, and a valid e-mail address.
The first thing that is done is to confirm the setup through the e-mail sent to you. Entering your tax information is fairly straight forward as most tax vendors use an interview method of obtaining the information. You are presented with questions that require a yes or no response, and from this the intuitive program is able to properly determine the tax forms that you must complete. From that point, it's only a matter of entering the information from your W-2 or other tax forms that you have into the program using an exact type of form. If you will be claiming dependents or itemizing other deductions, you simply enter the information into screens that are presented to you.
There are various tax credits and other benefits each year based on filing status, and after reviewing your answers to the yes and no questions, the intuitive program will know the ones that you may qualify for. The program will also review all information to make certain that the type of return being prepared will give you the lowest tax liability for your filing status. At the end of this calculation, you will see the results of your tax return on a screen where you will be able to review and verify the information that you entered.
At this point, you have several options to choose from to pay the fee for preparation of your return. One option is to have the fee deducted from your refund if your vendor permits that, or it can be paid by a credit or debit card. After you decide on the fee payment option, there are two more possible selections that you need to make. If you have a refund due, you can select to have a check mailed to you, or a better option is to have the IRS deposit your refund directly into one of your bank accounts, which is much faster. Should there be a balance due on your return, you can either mail a check to the IRS or you can allow them to charge your credit card instead.
After you have reviewed the return and paid the vendor fee, you are then ready to e-file your return. This is usually a one button click and the return is sent to the Internal Revenue Service center and also to to your resident state, assuming you reside in a state that has income taxes. There are generally other confirmation procedures if you have never e-filed before, and that is as simple as entering your previous year's AGI. After e-filing, you can then print out a copy of your tax return for your records, plus the software vendor will store your return on highly encrypted file servers to make your online tax filing easier next year.
Online tax filing vendors offer very similar services and the programs differ primarily in extras if you really want them. Before you sit down to make your selection of the vendor to use to file your tax returns, you should determine the extra services that your return may require. If you had income earned in more than one state, for instance, you will need to choose a vendor that offers multiple state filing. Try to compare the various vendors based on the forms and/or schedules that you may need, as the prices could vary significantly. Also be aware that the prices that you see advertised are for the most part, the cost of the federal return. There is usually an additional charge for the state return and these amounts also vary from vendor to vendor.
The tax code has become very complex, and with the many changes each year, it is usually beneficial for most individuals to take advantage of the online tax filing services. Not only is the cost less than the CPA down the street, but it is just as safe. Most tax preparation firms use the same software that the online vendors use, and the e-filing is the same. If you have any apprehension, take a free trial with one of the online vendors and see if you can do the return. If not, it doesn't cost you anything but a little of your time. If your return is complicated, and you have doubts that you can file the return online, then by all means take it to a qualified tax preparer.
All of the vendor online tax filing websites pretty much function about the same, some just offer more bells and whistles, and most try to compete in price by offering various extra services. For the 2010 tax filing season, almost all of the vendors are offering free filing for the federal 1040EZ return and are only charging to file the state return. The procedure for filing your tax return online is fairly simple and begins by deciding on a username and a secure password, and a valid e-mail address.
The first thing that is done is to confirm the setup through the e-mail sent to you. Entering your tax information is fairly straight forward as most tax vendors use an interview method of obtaining the information. You are presented with questions that require a yes or no response, and from this the intuitive program is able to properly determine the tax forms that you must complete. From that point, it's only a matter of entering the information from your W-2 or other tax forms that you have into the program using an exact type of form. If you will be claiming dependents or itemizing other deductions, you simply enter the information into screens that are presented to you.
There are various tax credits and other benefits each year based on filing status, and after reviewing your answers to the yes and no questions, the intuitive program will know the ones that you may qualify for. The program will also review all information to make certain that the type of return being prepared will give you the lowest tax liability for your filing status. At the end of this calculation, you will see the results of your tax return on a screen where you will be able to review and verify the information that you entered.
At this point, you have several options to choose from to pay the fee for preparation of your return. One option is to have the fee deducted from your refund if your vendor permits that, or it can be paid by a credit or debit card. After you decide on the fee payment option, there are two more possible selections that you need to make. If you have a refund due, you can select to have a check mailed to you, or a better option is to have the IRS deposit your refund directly into one of your bank accounts, which is much faster. Should there be a balance due on your return, you can either mail a check to the IRS or you can allow them to charge your credit card instead.
After you have reviewed the return and paid the vendor fee, you are then ready to e-file your return. This is usually a one button click and the return is sent to the Internal Revenue Service center and also to to your resident state, assuming you reside in a state that has income taxes. There are generally other confirmation procedures if you have never e-filed before, and that is as simple as entering your previous year's AGI. After e-filing, you can then print out a copy of your tax return for your records, plus the software vendor will store your return on highly encrypted file servers to make your online tax filing easier next year.
Online tax filing vendors offer very similar services and the programs differ primarily in extras if you really want them. Before you sit down to make your selection of the vendor to use to file your tax returns, you should determine the extra services that your return may require. If you had income earned in more than one state, for instance, you will need to choose a vendor that offers multiple state filing. Try to compare the various vendors based on the forms and/or schedules that you may need, as the prices could vary significantly. Also be aware that the prices that you see advertised are for the most part, the cost of the federal return. There is usually an additional charge for the state return and these amounts also vary from vendor to vendor.
The tax code has become very complex, and with the many changes each year, it is usually beneficial for most individuals to take advantage of the online tax filing services. Not only is the cost less than the CPA down the street, but it is just as safe. Most tax preparation firms use the same software that the online vendors use, and the e-filing is the same. If you have any apprehension, take a free trial with one of the online vendors and see if you can do the return. If not, it doesn't cost you anything but a little of your time. If your return is complicated, and you have doubts that you can file the return online, then by all means take it to a qualified tax preparer.
About the Author:
Want your tax refund quick? Gust Lenglet, a financial adviser and tax accountant for many years, encourages online tax filing for an accurate return. You can file taxes online quickly and get your refund in a few days. Please visit his website and see just how easy it is to file taxes online at very low cost.