It’s cold and snowy out today in Philadelphia and across much of the country. It’s the kind of day where you really should stay inside and get things done… like maybe your taxes.
The Internal Revenue Service (IRS) previously declared that the 2012 tax season has officially kicked off and this week, the IRS proclaimed that the 2012 electronic tax return filing season (or e-file to you and me) was now open for business.
The IRS has come a long way from the 1980s when e-file was still a novelty. In 1986, only 25,000 returns were e-filed. Last year, the IRS took on McDonald’s-like numbers, announcing more than “one billion served” in total. Of those, more than 112 million income tax returns were e-filed in 2011, representing 77% of all individual returns filed. The numbers are climbing so quickly that the IRS hasn’t automatically put forms in the mail for a couple of years now.
Why does the IRS encourage e-file? In a word: cost. When you e-file, you’re not just saving paper, you’re saving tax dollars. IRS Commissioner Doug Shulman claims that “an e-file return costs us 20 times less to process than a paper return, this program means a more efficient government that has saved America’s taxpayers hundreds of millions of dollars.”
The IRS also claims that e-file is faster, more efficient, and more accurate for taxpayers. Statistically, error rates for e-filed returns are just 1%, compared to a 20% error rate for traditional paper returns.
If you want to e-file, you aren’t locked into doing your returns yourself. There a few ways taxpayers can e-file their tax returns: using a tax return preparer, using software programs like TurboTax or TaxACT on your home computer, or through IRS Free File. No matter which option you choose, be aware that the IRS does not charge for e-file. Fees associated with e-file might be imposed by your preparer or the software program but there is no charge from the IRS.
Also, keep in mind that e-filing doesn’t mean that you have to pay early if you owe – and it doesn’t mean that you have to use a credit card. You can e-file early and still pay with a payment voucher all the way up to April 17 (the due date for taxes this year). You can use a credit card to pay or pay by check. For the younguns, checks are those paper things from banks that women like me keep in their pocketbooks; believe it or not, you can use them to pay for stuff (in my hometown, you can still buy groceries with them).
Finally, what about those RALs (Refund Anticipation Loans)? I know you think they’re faster than the alternative but consider this: if you e-file and use direct deposit, you can get your money back in about 10 days, sometimes even faster. And not a penny of interest out of your pocket. Promise me that you’ll think about it.
If you’re not ready to file today (because, for example, your forms haven’t arrived yet), you could try finding a tax preparer that you like or spend the day opening mail and getting organized.
Of course, all of that said, I know what I’m going to do: go play in the snow with the kiddos and the dog (yes, that’s my dog in the picture above). Enjoy your day!