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E-filing a quick, easy way to take care of taxes

The computer can help a modern consumer do just about anything - keep in touch, shop, make vacation reservations. Among those conveniences, filing taxes is also only a few clicks away. In 2005, 68.5 individual returns were filed electronically, an 11 percent increase over the previous year, according to the Internal Revenue Service. More than 8 million business returns were also e-filed, up from 6.7 million in 2004.

“We are becoming a paperless society. Even some forms can only be obtained online,” says Clarke Whitney, CPA, with the firm Clarke Whitney CPAs.

The IRS uses a consortium of tax software vendors to provide free e-filing for qualified taxpayers. Each company has its own eligibility criteria and sets up its own system via commercial online software, according to the IRS.

“It gives me a lot of control over information,” says Whitney, whose firm uses a software provider as well for the e-filing program and submits all clients’ returns electronically. “We know things were sent in because we have a record.”

Those who don’t use an accounting firm for filing their tax returns can take advantage of e-filing by either purchasing a software program at a store or visiting www.irs.gov for links to participating online companies. The advantage of electronic filing is not only convenience - the program takes you through step by step, asks relevant questions, and completes all the necessary schedules — but also the accuracy of the returns. The program does all the math and will find inconsistencies or potential errors. Certain requirements must be followed for IRS to accept the return, and in a small number of cases when the return is rejected, a reason is given, and the return can be refilled after correcting the glitch.

The IRS sends electronic confirmation when the return is accepted. Taxpayers who are due a refund and choose to have it deposited electronically will usually see it in their bank account as fast as 10 days later; those electing to receive a check will still receive a refund in about half the time compared to paper filers.

When it comes to paying taxes due, e-filing provides convenience as well. “You don’t have to run to the post office on April 15, you can just authorize for the amount to be taken out of your account on April 15 ,” said Todd Damish, CPA, a tax manager with accounting firm Southerd Beckham Atwater & Berry CPA, PS.

The IRS will allow electronic filing in the majority of cases for individuals and small businesses, but there are some exceptions.

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