WASHINGTON
— The Internal Revenue Service today announced the Jan. 16 opening of an
expanded IRS e-file program for 2008 federal tax returns, highlighted by new features
that will allow expanded access to electronic filing and help people looking for
faster refunds.
IRS Commissioner Doug Shulman
encouraged taxpayers to explore e-file this year as the best option to file accurate
tax returns and get fast refunds during the current economic downturn. The e-file
program also includes new improvements to the Free File program that will allow
nearly all taxpayers to e-file for free.
"These
are tough times, and e-file is the best way for people to get cash in their pocket
quickly," said IRS Commissioner Doug Shulman. "Filing electronically
with direct deposit can get refunds to taxpayers in as few as 10 days. Combined
with important changes in the Free File program, we believe e-file is a better
option than ever before for the nation's taxpayers."
Last
year the average refund was $2,429. The IRS realizes people need their refunds
quickly. Shulman urged people who haven't e-filed before to consider the e-file
option this year.
IRS e-file totaled nearly
90 million tax returns in 2008. Almost 58 percent of all returns were filed electronically.
Last year, there was a surge in e-file from home computers. Nearly 27 million
people prepared their own e-file return. That's an increase of more than 19 percent
from the previous year.
IRS e-file meets the
needs of nearly all taxpayers, no matter how complicated or simple their returns
are. E-file helps taxpayers take advantage of the tax credits available to them
to maximize their refunds during these tough economic times.
A
variety of tax software products are available commercially that offer e-file.
This year, several of them will not charge additional fees for e-filing for the
first time.
In addition, most taxpayers qualify
for free tax preparation offered through Free File on IRS.gov. Regardless of income
level, taxpayers who are comfortable with filling out paper tax forms and who
don't need extra assistance can use the IRS's new Free File Fillable Forms. These
new online versions of paper tax forms that can be e-filed are available for the
first time by visiting the IRS.gov Free File site.
Benefits
of e-File
Taxpayers who use e-file and
who choose direct deposit can receive their refund in as few as 10 days. That's
because with e-file, there's no paper return going to the IRS. And with direct
deposit, there's no paper refund going to the taxpayer. So it’s all electronic
and much faster than paper.
IRS e-file allows
taxpayers to file their returns now and pay later if they owe taxes. It allows
taxpayers to file both federal and most state returns at the same time.
Taxpayers
may use IRS e-file through their tax preparers, or with a computer using tax preparation
software. This software is available on the Internet for online use or for download.
Many retail stores sell the software for offline use. The IRS does not charge
taxpayers to e-file their completed returns, but some tax preparers and software
manufactures may charge a fee. However, this year a number of large software companies
are waiving this additional fee.
To get all
the benefits of electronic filing, taxpayers must make sure that when they are
done with their returns, they take the final step of e-filing them. Taxpayers
who use a paid preparer should make sure their preparers are taking this final
step, too. In addition to error checks contained in the return-preparation software,
additional checks are done during the e-file transmission process. That's why
the error rate is so low for e-filed returns. In fact, the error rate is significantly
reduced from 20 percent with paper returns to about 1 percent with e-filed returns.
E-filed
tax return information is protected through encryption. Also, taxpayers receive
an acknowledgement within 48 hours that the IRS has accepted their return.
Free
File
Free File, which is a form of e-file,
is a free federal tax preparation and electronic filing program for eligible taxpayers
developed through a partnership between the IRS and the Free File Alliance LLC.
The Alliance is a group of private-sector tax software companies. Since Free File’s
debut in 2003, a total of more than 24 million returns have been prepared and
e-filed through the program.
Free File offers
20 different software options that can assist taxpayers with an Adjusted Gross
Income (AGI) of $56,000 or less in 2008 to e-file their federal tax returns for
free. That means 70 percent of all taxpayers – 98 million taxpayers –
can take advantage of tax software that will help them complete their returns
through the Free File program. Three companies are offering their products in
Spanish.
This year, the IRS and its partners
are offering a new option, Free File Fillable Tax Forms, which opens up Free File
to virtually everyone, even those whose incomes exceed $56,000.
Free
File Fillable Tax Forms allows taxpayers to fill out and file their tax forms
electronically, just as they would on paper. This option does not include an “interview”
process like the other Free File offerings, but it does allow taxpayers to enter
their tax data, perform basic math calculations, sign electronically, print their
returns for recordkeeping and e-file their returns. This “self-service”
option may be right for those who are comfortable with the tax law, know what
forms they want to use or don’t need assistance to complete their returns.
Both
the fillable-forms option and the previously available “full service”
Free File offerings are available only through the IRS.gov Web site. Both new
and returning taxpayers must access Free File through IRS.gov. Otherwise, the
e-file provider may charge them a fee. Look for details on IRS.gov beginning Jan.
16.
Almost 4.8 million tax returns were filed
through Free File last year, an increase of 24 percent over the previous year's
total of nearly 3.9 million returns.
History
of IRS e-File
The IRS began the e-file
program in 1986 as a pilot project in three cities: Cincinnati, Phoenix and Raleigh-Durham,
N.C. That year, there were 25,000 tax returns filed electronically. The e-file
program expanded nationwide in 1990 and 4.2 million tax returns were filed. IRS
e-file has undergone tremendous growth each year, with nearly 90 million tax returns
e-filed last year.
