What everyone should know.
Still thinking about the best way to file your taxes electronically? Whatever you decide, keep these tips in mind.
Gather the Goods.
Whether you send your return via the Internet or the U.S. Postal Service, you have to do the numbers first. So before you start filling in your return, collect those W-2s, 1099s, bank statements, expense documents, and receipts, and organize them near your computer for easy reference. It’ll save time and help you complete your return in fewer sessions.
Contrary to popular rumor, filing electronically doesn’t reduce your chance of being audited. So make sure you keep that shoebox full of receipts handy–ideally, for up to six years–in case the taxman decides to pay you an unwelcome visit.
Check Your Math (and Your Spelling).
Most tax applications automatically check your return for errors before submitting it, but it’s up to you to make sure you’ve entered names, Social Security numbers, account numbers, and other details accurately. Sheryl Clark, a financial advisor in Tucson, Arizona, says a lot of E filed forms are returned by the IRS because of typos and simple errors. Her advice? “Make sure you type all information slowly and carefully, and double-check all your figures. Somehow it seems a bit scarier when you press the Send button than dropping it in the mailbox.”
Don’t Forget the Fees.
It’s not always clear which features are included when you first sign on with a tax service–for example, many first-time E filers say they didn’t know they’d be charged an additional fee for the online transfer of their tax returns to the IRS. Other common things include online services that charge to store your information for future years, extra fees to file state returns, and unexpectedly steep charges for tax questions and advice. Paying taxes is painful enough, so make sure you understand the details of what you’re paying for before you choose a service.
Avoid Last-Minute Nightmares.
One of the great advantages of e-filing is that it saves time. But if you wait until the last minute, you could find yourself in a losing race with the clock. If you start filling out your tax returns at 11 p.m. on April 15, your hard drive may crash at 11:45. So don’t tempt fate: Start early and rest easy.
Keep Questions to a Minimum.
If you have questions or need advice from a tax advisor, be warned: When it comes to taxes, talk (or online chat, for that matter) isn’t cheap. H&R Block and many other leading services charge about $20 per question.
Look Into Free File.
Certain taxpayers are eligible for Free File, a program sponsored jointly by the IRS and the tax software industry that offers free or discounted tax preparation and filing services