Efile - Income Tax Return Electronic Filing

Here are some reasons why electronic filing makes sense for most taxpayers:

• Fewer mistakes

Using tax software such as TurboTax substantially reduces errors. According to the IRS, more than 17 percent of income tax returns prepared on paper have mistakes, such as missing information or taxes calculated using the wrong tax tables; half of those errors cause folks to overpay their taxes. But less than 1 percent of returns prepared electronically contain errors. If there is a mistake on your return, the IRS can detect it and send back an error report in as few as 48 hours so that you can quickly fix the problem.

• Speedier preparation

  You can get the job done a lot faster if you tackle it with your computer. Filing from your computer saves you the trip to the post office, too.

• Faster refunds

  If you send in your return by mail, you can expect to wait up to six weeks for your refund. But last year, folks who used TurboTax to efile their returns and elected to have their tax refunds deposited directly into their bank accounts had their refunds in 8 to 15 days. If, however, you still prefer to send the IRS a paper return, TurboTax gives you that option.

Ever worry that your return might get lost in the mail? Efiling lets you rest easy. When you send a return by mail, you have no way of knowing if the IRS received your return unless you pay extra for certified mail with a return receipt. It could take weeks for you to get that receipt.

But if you file electronically, the IRS notifies you by email within 48 hours that it has received your return. And if the IRS detects any errors, it will send an error code that TurboTax will translate into a text message telling you what the problem is, how to fix it, and how to retransmit your return.

You can save more trees than ever using efile: It's now possible to file a completely paperless return, right down to your signature. You can use a self-selected Personal Identification Number (PIN) just as you would at a bank ATM. The PIN is your electronic signature.

The following 37 states and D.C. allow you to efile your state return at the same time you file your federal tax return online from your personal computer. This is called the Federal/State Efile for Taxpayers program. Essentially, you send both returns to the IRS, and the IRS electronically forwards your state return to the tax authority in your state.

Alabama	Kansas	North Dakota
Arizona	Kentucky	Ohio
Arkansas	Louisiana	Oklahoma
Colorado	Maryland	Oregon
Connecticut	Michigan	Pennsylvania
Delaware	Mississippi	Rhode Island
District of Columbia	Missouri	South Carolina
Georgia	Montana	Utah
Hawaii	Nebraska	Vermont
Idaho	New Jersey	Virginia
Illinois	New Mexico	West Virginia
Indiana	New York	Wisconsin
Iowa	North Carolina

A few states allow you to file your state return directly, including California, Illinois, Maine, Massachusetts and Minnesota.

Yes. You've got no worries about data falling into the wrong hands or being misused because the IRS, the states and tax preparers are under the same rules of confidentiality for efiled returns as they are for paper returns. They may not reveal or discuss any information contained in your return unless you authorize them to do so. Tax software developers also must operate under these rules, and they must protect customer confidentiality during the eFiling process. To ensure the integrity of your electronically filed tax return, always use only proven, high-quality efiling software.

Yes. You can still pay with a check sent via snail mail if you prefer. As long as the check is in the mail by the due date of your return—April 15, 2009 for 2008 returns—the payment is considered to be on-time. Or you can advise the IRS to debit your checking or savings account for the amount due. No matter when you file your return, you can tell the IRS not to tap your account until the due date. A third option is to charge the balance due to a credit card. This method will cost you extra money, though; you'll have to pay a "convenience fee" of about 2 percent to the third party that handles the transaction. States are gradually adding these options.

If you're looking for an excuse not to efile, cost isn't it, because the IRS and states do not charge for efiling; the only costs associated are those charged by a tax preparer or tax software. Depending on the software brand and version, electronic filing charges for the previous filing charges have ranged from free to $25. Tax preparers may charge more.

Both TurboTax Online and TurboTax CD/Download products include federal efile at no additional cost.

Efiling will deliver your tax refund much faster than traditional mail. For tax returns efiled this past tax season, taxpayers using TurboTax and electing to have their refunds deposited directly into their bank accounts received their federal refunds on average within 8 to 15 days.

Refunds from tax returns filed on paper can take up to six weeks, depending on the time of year you filed the tax return.

Updated for tax year 2008