You pay the government a certain amount of your income as tax, which is then used to give you better public services. The Internal Revenue Service (IRS) is the agency that is officially responsible for collecting the whole country’s tax. On the IRS website, you can not only file your federal taxes that are collected by the government but also file state tax returns that go to the state you reside in.
What are the steps for E-filing taxes on IRS?
Today, E-filing (electronically filing) taxes has become the best way to go about it. For E-filing taxes, you need to follow the following simple steps:
• Gather the documents – The first step is to gather all the documents you will require for E-filing taxes and keep them ready. Make sure that you have the W-2 form, income statements, health insurance coverage documents, money spent on charity, and interest statements for the same.
• Research – Once you have the documents ready, see if you fall under the free tax return preparation. If you have military men, people with disability, or a senior citizen in your family, you can get certain leeway on the tax returns.
• Fill the right form – Use the IRS E-file website to fill the tax form, as here you can be sure that you are filling the correct tax form.
• Analyse your funds – Calculate your income, investment, and taxes. This is where you check for the tax deduction and credit by showing proofs if you donate in charity or have expenses concerning your child’s care.
• Check for tips to save taxes – For instance, if you have a child, claim the child as a dependent, so that you can save some tax.
Why should you ditch paper and file your tax returns online?
Filing taxes online has many benefits. You get a refund on your tax if you later claim the returns. Today, with the advent of the Internet, life has become easy and so has the filing of your taxes.
Here is why you must consider E-filing taxes:
It is permanent
One of the best things about E-filing taxes online is that it will stay there forever. This means that if a year later you want to go back and cross check, you can do so. It saves you the trouble of going through the filing cupboards and stacks of paper.
It is concrete
When you file your taxes online, you make use of the tax software to fill the form. This means that you need not worry about the calculations going wrong or which is the exact form you need to fill next.
It is no secret that you can E-file your tax returns in half the time you will require to do the same manually. The whole preparation of tax and filing process speeds up when you do it online.
Fast tax refund
The best reason why you should file your tax returns online is that it gives you quick tax refunds. With the option of “Direct Deposit,” you can avail the option of receiving the funds directly in your account within few weeks.
When it comes to E-filing taxes, concerns about your tax data getting leaked is obvious. However, you need not worry about it. The tax software, tax preparers, and the tax software developers are not allowed to disclose any data without authorization. They are all bound to the same confidentiality rules that apply to the manual tax filing system.
How much money do you need for E-filing taxes?
If your Adjusted Gross Income (AGI) is below $66,000 annually, then you have the benefit of using the IRS Free File Software Program. If not, then you will have to pay for using the tax preparing software. Note that it is comparatively expensive to file your tax returns online as compared to the traditional way. E-filing a federal tax return could cost you anywhere from $20 to $80. If along with the federal taxes to the government, you submit your state’s return, then you will need to spend an additional $30 to $50.
Which are the top companies to consider when E-filing taxes?
Many citizens today file or plan to file their taxes online. There are many unpaid and paid websites where you can file your taxes.
The Free File software is one of the best tax software to file your tax returns. If you have an AGI below $66,000 annually, then you are eligible to use this free tax software. The Free File software is a government and private partnership and initiative that lets people in the lower income bracket file federal taxes for free.
Other popular tax software that you can check out are the H&R Block, TurboTax, TaxSlayer, and Intuit.
Each of these websites specializes in different types of tax returns, so you must know what you are looking for and pick one that suits your requirements best. You must remember that while many websites provide free federal tax returns, they charge separately for state returns.
The most important thing to keep in mind is that the E-file provider you use should be authorized by the IRS. This will ensure that the E-file provider is licensed to transfer your tax returns to the IRS electronically.
You can check the IRS website to get the names of all the tax software companies that are authorized by them.