The U.S. Internal Revenue Service and all states offer e-file as a way to file income tax returns online. According to the IRS, more than 90 million taxpayers used e-file for federal returns in 2008, encouraged by incentives like quick tax refunds.

History

Tax returns historically consisted of printed forms that the taxpayer filled out, signed and mailed, with the postmark certifying that the April 15 deadline was met. Starting in 1986, the IRS began offering electronic filing possibilities.

Benefits of e-filing

The main benefit for most taxpayers is that refunds on withholding tax are sent very quickly, within a week or two of e-filing. Other benefits are increased accuracy and savings on paper and postage.

Free file

The IRS website offers a "Free File Alliance" with links to private companies that will provide free e-file service to those with adjusted gross income of $57,000 or less. The IRS has a disclaimer for these sites, which offer guidance in filling out the forms and e-file federal taxes for free. However, there are extra charges for actual tax preparation software, for filing extensions, for state return e-files, and if your income exceeds the threshold. For any income level, there are free file fillable forms that can be filled out and filed electronically or printed out and mailed in.

Tax software

Many tax software programs, such as Turbo Tax, include e-filing of federal and state returns as part of the software package.

Tax preparers

Professional tax preparers have several options to become authorized e-file providers and offer assistance in e-filing for their business and individual taxpayer clients.

State e-filing

All 50 states and the District of Columbia now offer e-filing services, though not all are as reliable as the IRS service.

Source:

Internal Revenue Service