Over the last few years, there have been several
incentives, or even requirements, provided by the IRS and
state governments to encourage tax filers to file their
returns electronically. Statistics show the percentage of
e-filers is on the rise. With tax return deadlines right
around the corner, we want to share our thoughts on the
questions we receive most often from clients about e-filing.
Top 5 questions I am asked about e-Filing:
#5 Do I have to e-file?
No. Currently, the IRS does not require any tax returns to
be e-filed, though several states have implemented this
requirement. In the past, the state has sent a "reminder"
notice that future returns should be e-filed, but have
warned that paper returns filed in the future will either
be rejected or subject to a penalty. This most likely means
that e-filing state income tax returns in these states will
be mandatory, and we can anticipate that other states will
add similar requirements.
#4 Do I have to provide my bank account information?
No. The only time your bank account information needs to
be provided is if you would like your refund directly
deposited into your bank account, or if you would like your
payment directly drafted from your bank account. If you
are hesitant to provide your bank account information to
government agencies, you can receive your refund by check
or if you owe, you can make your payment by mailing in a
check.
#3 How long does it take to e-file?
Usually a return is accepted by the IRS or state within a
few business days of the return being submitted. The
acceptance provides confirmation that the return has been
timely filed.
#2 If I owe with my return, is the payment due when my
return is e-filed?
E-filing the return before the due date does not accelerate
the due date of taxes. Payments can still be remitted
separately any time before the due date of the return, even
if the e-file is processed earlier.
Consider the following strategy. If you owe on your
federal return, but are due a refund on your state return,
then e-file both returns early. You could receive your
state refund in time to use it towards your federal payment
due. The same holds true if you owe on your state return
and are due a refund on your federal return.
#1 Why should I e-file?
Here are a few reasons to e-file:
The risk of a return being lost in the mail or misplaced is
minimized. Usually a taxpayer is not notified of a missing
return until months or even years later. When a return is
e-filed, confirmation of acceptance (receipt) by the IRS or
state is provided within a few business days.
Paper filed returns are manually entered into the
government's system, meaning that an input error could
trigger a tax notice.
Part of the e-filing acceptance process used by the IRS and
state governments includes a "pre-check" of certain items.
These items must be correct in order for an e-filing to be
accepted. This greatly minimizes the chance of receiving a
tax notice.
Returns are processed more quickly; if you are due a
refund, it will be sent sooner.
Warmest Regards,
Tom
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Tom Wheelwright is not only the founder and CEO of
Provision, but he is the creative force behind Provision
Wealth Strategists. In addition to his management
responsibilities, Tom likes to coach clients on wealth,
business, and tax strategies. Along with his frequent
seminars on these strategies, Tom is an adjunct professor
in the Masters of Tax program at Arizona State University.
For more information, visit http://www.tomwheelwright.com
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