A Tax Fact From The Tax Institute at H&R Block

E-filing makes good tax sense.  For taxpayers who e-file, refunds will generally be issued in half the time as when filing a paper return, and even faster if you choose direct deposit.  Most refunds are issued within 3 weeks for electronic returns, and 8 to 15 days if you choose direct deposit.  A refund check could take as long as 6-8 weeks for filing a paper return and having the refund check mailed.

In 2001, just over 40 million returns were e-filed. That number doubled to almost 90 million e-filed returns in 2008, which represented about 58% of all returns filed. The IRS has estimated that at least 96% of all paper returns are eligible for e-filing.  Notably, e-filed returns are 99%+ accurate vs. 81% for paper returns. 

Electronic filing, or e-filing, transmits a completed copy of your return to the IRS. H&R Block’s office locations e-filed more than 94 percent of the federal returns prepared for its more than 16 million U.S. clients served last year and the vast majority of the company’s nearly 6 million TaxCut^® software and online filers chose to e-file as well.

E-filing offers many advantages over traditional, paper return filing.

1. Time, postage, and paper. You will not need to make extra copies of your return, wait in post office lines, or pay postage. Do make sure, however, that you keep a printed copy of the return plus supporting documents for a minimum of three years.
2. Faster refund. On average, tax refunds on e-filed returns are received in less than two weeks. Refunds from paper returns can take as long as eight weeks.
3. Timely filing worries eliminated. You will not have to wonder if the IRS received your return on time, or if it was received at all. Shortly after your return is successfully transmitted, you will receive a confirmation from the IRS that the return was accepted.
4. Faster notification of errors. Suppose you file a paper return and accidentally transpose two digits of your child’s social security number. The IRS treats the incorrect number as a math error. They will "correct" the error by removing your child, and any child-related deduction or credit, from the return. Your refund or balance due will be adjusted accordingly. It may take weeks, or even months, to find out about the problem. Once you learn of the problem, you will need to file an amended return to show the correct SSN. If your refund was reduced, you have to wait even longer to receive that part of your refund.
   
   If you e-file your return with the same mistake, the return is rejected by the IRS because of the mismatch of the name and SSN.  Sounds terrible, but within 24 - 48 hours, you receive an electronic notice explaining the problem. You can then resubmit the return with the corrected number. The delay is only a few days at most.
5. Signing the return. New for tax year 2008, the former signature form (8453-OL) has been eliminated by the IRS. Taxpayers choosing to e-file will now need to provide their exact tax year 2007 adjusted gross income (AGI) or their 2007 PIN – personal identification number – before electronically filing the 2008 return. You can find your AGI for Tax Year 2007 on Line 37 of Form 1040, Line 21 of Form 1040A and on Line 4 of Form 1040EZ.
   
   If you were a TaxCut user last year, the program will allow you easy access to a PDF of your 2007 return. You can then easily import this information into the required area for e-filing. For new and returning TaxCut users, the program will also include FAQs and text information, detailing where you can locate last year’s AGI on your tax return. If returning users need additional assistance, our TaxCut Support Center (888-4TaxCut) will be able to retrieve the 2007 AGI information once they are provided with the correct security information.
6. What about that refund? When you e-file your return, you can request an IRS check by mail or provide information that will allow your refund to be electronically deposited into as many as three separate accounts.
7. What about a balance due?  You can authorize the IRS to debit your bank or checking account on April 15 for the amount of your balance due.  Or, you can e-file your return before April 15 and mail the IRS your payment by April 15.  (There are other options available for paying your balance due.)

So, if you would like to save time, worry, and postage stamps, get a faster refund, and perhaps save a few trees along the way, consider e-filing your 2008 federal return – you’ll be glad you did.

This Tax Fact is brought to you by The Tax Institute at H&R Block.

To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com

As always . . . everyone’s tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.

This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.