eFile – Frequently Asked Questions

Tax Defense

eFile is a growing way for many Americans who like to file their taxes online or reduce the time between filing the tax return and receiving their tax refund. Here are some answers to the most common questions asked about IRS eFile (E-Filing).

Question: What is IRS efile at all?
Answer: IRS e-file is an electronic tax-filing service available to individuals. It is the fastest way to file taxes - and get a tax refund in half of the usual time.

Question: What do tax payers gain by using IRS efile?
Answer: Let’s say it this way: Fast electronic filing, means a fast proof of acceptance which equals in fast tax refunds. The tax payer gains Peace of mind and a lot of security. Your tax preparer of choice transmits your tax return through their computers to the IRS gateway. Your tax return is submitted and within 48 hours the IRS sends proof that it has been accepted. Only IRS e-file offers this advantage. No other service is currently available to do the same.

Question: How accurate is IRS efile?
Answer: It is literally error-proof. In matter of fact - IRS e-file is so accurate that it greatly reduces the chance that you’ll get audited by the IRS.

Question: What about my signature?
Answer: With e-file, the IRS still requires proof legally that the return is submitted by the taxpayer. You can sign with a Self-Select (electronic signature so to speak) PIN and AGI or mail/fax in a Form 8453-OL/8453 with your signature that declares you have e-filed your tax return.

Question: Do I really get my refund faster if I efile my tax return?
Answer: With IRS e-file, you’ll get it as soon as 10 days after filing or on average in half the usual time it would take if you file a paper tax return. It’s even faster if you have your refund directly deposited to your bank account.

Question: What If I owe a balance due? Why should I want the speed of efile?
Answer: You can file now, and actually pay the amount due later, and still beat the last-minute rush. No matter when you e-file your tax return, you don’t have to pay what you owe until April 15. In the meantime, you have a fast, electronic proof of acceptance from the IRS and can let your money work in a (as an example) in a money market account.

Question: Where else can I get additional information about IRS efile?
Answer: Visit the IRS website at www.irs.gov or in your tax booklet that you should receive some time in January.

Question: Is there a fee for IRS efile?
Answer: The IRS does not charge a fee for e-filing, but most tax service providers charge a gateway fee (up to $100 from what we have seen). Rest assured that the services recommended through the Smarttaxadvice.com website do NOT charge these outrageous fees, but rather a small fee. You should not spend your hard earned money on unreasonably high submission fees.

Question: Can I efile my state tax return with a Federal return?
Answer: In most cases, yes. Ask your tax preparer about this service or visit your state’s home page.

Question: How do I pay my outstanding taxes when I choose IRS efile for my tax return?
Answer: You have several choices this year. You can authorize a direct transfer from your checking or savings account as part of your return. With this option you can delay when the money comes out of your account until later-as late as April 15. You can also pay by phone using a credit card by dialing 1-888-2-PAY-TAX and entering a jurisdiction code of 1040. You can still pay by check or money order.

Question: If I choose the direct transfer option and delay payment, can I be sure the money won’t be withdrawn sooner?
Answer: Money will not be withdrawn from your account before the exact date you specify. However, if you designate a weekend or bank holiday, the payment will not be withdrawn until the next business day because the U.S. Treasury can settle payments only on business days.

Question: What confirmation of payment will I receive?
Answer: Your confirmation will be your bank statement and your copy of your electronically filed tax return which includes your direct transfer authorization.

Question: Can I make my payment on or after April 15?
Answer: You can designate the payment to be made up to and including April 15, but not after that date. Your payment will be considered timely if your electronic tax return is transmitted and accepted on or before April 15. Note: some transactions may take a day or two longer, due to circumstances beyond the control of the IRS. Therefore, we suggest that all payments be scheduled for transaction at least two business days before April 15.

Question: What if later I want to cancel or change my designated payment date?
Answer: Once you efile your tax return and it is accepted by the IRS, you cannot change your designated payment date. If you need to change the date, your only option is to cancel the transaction and send a check for the correct amount. You may cancel a payment ONLY if Treasury receives cancellation instructions by the morning of the business day prior to the day that you designated as your payment date. The cancellation must be authorized by you or by a person with access to your Taxpayer identification Number (TIN), payment amount, and bank account number. Please call 1-888353-4537 toll-free if you need to cancel a payment.

Question: Can I make partial payments?
Answer: You can make a payment for less than the balance due amount on your tax return. However, you are responsible for paying the remaining balance due by April 15 or you will be subject to late payment penalties and interest. If you cannot pay in full by April 15, you should file form 9465, Installment Agreement Request. An approved Installment Agreement allows you to make a predetermined series of partial payments after April 15 and includes interest charges since these payments are considered late.

Question: If I do not choose to pay electronically when I file my electronic tax return, can my tax preparer initiate an electronic payment for me at a later date?
Answer: No. An electronic payment is initiated only at the time an electronic tax return is filed.

Question: If I give the IRS access to my bank account number, what else can they do with it?
Answer: Nothing at all. The IRS will use your direct transfer authorization ONLY for this one tax payment to deduct the amount you designated at the time that you filed your electronic tax return. Rest assured that your bank account is safe from the greedy hands of the IRS.

We hope that these questions and answers will help you to make an informed decision in regards to how to file your taxes online. As always Smarttaxadvice.com recommends to consult with a tax professional if you do not feel comfortable filing your taxes yourself or have questions that do require more attention.

January 6, 2008 | Filed Under Tax Filing

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Review: TurboTax Deluxe - Federal + State 2007

Tax Defense

Another tax preparation software review here at SmartTaxAdvice.com. This time we picked TurboTax Deluxe 2007 for Federal Returns made by Intuit. TurboTax Deluxe 2007  is the 2007 Edition of this well known tax software and can help you maximize your tax deductions with mortgage interest, donations, education expenses, and medical expenses - over 350 in all! In our review we did not go that far, but concentrated on an average tax return. We wanted to see if the tax software would live up to the high standards it has set in the past years. We were impressed with the 2007 Edition of TurboTax Deluxe and how it has evolved. TurboTax Deluxe 2007 guides you step-by-step through the process and asks you easy to understand questions in plain English. It then puts your answers on IRS- and state-approved forms on the screen (and of course in the final output). We found this a great option for those people who are not ready to trust the eFile option and still prefer to mail in a paper tax return. We printed the tax forms out and compared them to the ones you get directly from the IRS website – no difference and you will be very safe to use them to file your paper tax return and to eventually archive your return for future reference.

Here are some more highlights of our TurboTax Deluxe review.

TurboTax Tax Preparation SoftwareTurboTax Deluxe 2007 helps you handle changes in your life with the many events that can affect your taxes. I always found it confusing how some life changes affect your taxes abd TurboTax does a great job to address those concerns. The tax saver videos included in the tax preparation software are great in my opinion.

TurboTax Deluxe Federal + State 2007 guides you through your federal and state tax returns, with simple-to-understand questions to help you finish and file your federal and state taxes. You can Find over 350 tax deductions depending on your personal situation so that you can take advantage of getting credit for your donations as an example.

TurboTax includes a huge variety of tax forms. No need to search the confusing looking IRS website. Just open TurboTax and easily access any common tax form you might need to file your return. Here is an (incomplete) list of tax forms  included in TurboTax.

Form 1040 Individual Income Tax Return
Form 1040A Individual Income Short Form
Form 1040EZ Individual Income Tax Return EZ
Form 1040-V Payment Vouchers
Form 1040X Amended Individual Tax Return
Form 1099-DIV Dividend Income Worksheet
Form 1099-G Certain Government Payments
Form 1099-INT Interest Income Worksheet
Form 1099-MISC Miscellaneous Income Worksheet
Form 1099-MSA Medical Savings Account Distribution
Form 1099-OID Original Issue Discount
Form 1099-Q Qualified Education Program Payments
Form 1099-R Distributions from Retirement Plans Worksheet
Form 1116 Foreign Tax Credit
Form 1310 Stmt of Person Claiming Refund
Form 2106 Employee Business Expenses
Form 2120 Multiple Support Declaration
Form 2210 Underpayment of Estimated Tax
Form 2210AI Annualized Income
Form 2441 Child and Dependent Care Expenses
Plus tons more to get all of your taxes taken care of.

Reduce Your Risk of Audit. TurboTax Deluxe double-checks your return for accuracy and completeness and helps you fix any errors before the IRS spots them. I love seeing these guarantees, because it makes me trust the tax preparation software more. Being audited by the IRS sucks big time and I just can sleep better at night knowing that I can just hand off all my stuff to a TurboTax Professional and let them deal with the IRS.

Like TaxCut TurboTax comes with a large package of guarantees. As an example there are the 100% Accurate Calculations Guarantee, the Maximum Refund Guaranteed or Your Money Back, and the satisfaction guarantee. Purchases Made at a Retailer: Try TurboTax software. If you’re not satisfied with TurboTax software, return it within 60 days of purchase with your dated receipt for a full refund of the purchase price. These guarantees match the ones issues by other tax preparation software makes or even exceed them.

Conclusion: If you are familiar with TurboTax and used it the years before, you will just jump right and prepare your tax return easily. If you are new to TurboTax you will find a very easy to use tax software package that has almost eveyrthing you need. If you have a small business and want to use Turbo Tax to file your tax return you might want to look at the expanded features of TurboTax 2007 Home and Business. Anyway – TurboTax Deluxe is a great tax software to file your taxes yourself and to avoid the need to pay for a tax accountant. Two Thumbs up from SmartTaxAdvice.com

December 23, 2007 | Filed Under Tax Filing, Tax Preparation Software

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Review: H&R Block TaxCut 2007 Premium Federal + State (Win/Mac Edition)

We have reviewed the H & R Block TaxCut 2007 Premium edition for Windows and Apple computers. The software comes in several editions, but most tax payers should be fully covered by the H&R Block Premium Edition that includes the State package as well. We decided against the efile edition as there are several service providers that allow easy online efile services for equal or less money. If you are interested in the efile edition of this software – the only difference to this reviewed version is the included eFile allowance – pretty much a pre-payment of the efile fees (Find more details here). Anyway – on to the review of H&R Block TaxCut 2007 Premium Federal + State.

TaxCut Tax Preparation SoftwareTaxCut Premium Federal+State includes almost everything a tax payer needs to complete the federal and state tax return. The software package includes guidance for almost every personal tax situation from 1040EZ to filing a Schedule C. A step-by-step interview guides users through a customized and personalized process. This interview process includes advice on how to find more deductions and how to get the maximum possible tax refund – guaranteed by H&R Block. TaxCut Premium Federal+State also includes advanced tools for financial investors and small business owners such as guidance for income from rental property and related expenses, assistance on investment income and stock options. One section even covers a “how to maximize business deductions” for sole proprietorships.

Some notable highlights:

H&R Block has issues several Guarantees that are included in the tax preparation software package. Here are some examples that will be of interest for you:

Worry-free Audit Support
You can rest easy knowing H&R Block is there to help in the rare event of an audit. This guarantee is included when you e-file your federal return through H&R Block

Accurate Calculations Guaranteed
If TaxCut makes a calculation mistake, H&R Block pays the resulting IRS penalties plus interest. See the software license agreement for details.

100% Satisfaction Money-Back Guarantee
If you are dissatisfied with the software for any reason, H&R Block will refund the full license fee you paid H&R Block or its authorized reseller for the software, exclusive of shipping and handling charges, taxes, and less any rebate you receive on the software. We highly recommend to use AMAZON.com to buy the software as you can mail it back at no fees using Amazon’s return policy. Please make sure you read Amazon’s and H&R Block’s policies.

Conclusion: We found the software very easy to install on a Windows PC running Windows Vista. The tax preparation software worked fine when we created a sample tax return. Of course we were not able to look further into eFiling as a) we would have to wait for 2008 to arrive and b) you would need a real tax return to do so. When we compared the results with other tax preparation tools H&R Block was a top contender. Two Thumbs up from SmartTaxAdvice.com for H&R Block 2007 Premium Edition Federal and State

December 23, 2007 | Filed Under Tax Filing, Tax Preparation Software

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