ORIGINALLY WRITTEN DON RATZLAFF
Sending in your tax returns electronically rather than by mail is not just the wave of the future, it’s the wave of the present.
“I’d say of the returns we do, we probably e-file 80 percent of our returns,” said Bryce Wichert, who works out of the Adams, Brown, Beran & Ball Chtd. in Hillsboro.
“We go with the philosophy now that if you’re getting a refund, we’ll e-file it unless you let us know otherwise,” he said. “Most folks appreciate that because you get your refund so much faster and it’s a lot easier.”
In 2003, some 53 million individuals filed their tax returns electronically, according to the Internal Revenue Service.
The most attractive reason for filing electronically is the likelihood of receiving refunds in significantly less time.
“If you e-file and have it directly deposited into your account, you can have your refund in two to three weeks,” Wichert said.
“Everybody wants to get their money quickly anyway,” he added. “If you mail in a return with a refund on it, you’re looking at eight to six weeks for your check. If you mail it in April, it might be longer.”
Another advantage of e-filing is the quick verification that a return is filed accurately.
“E-filing requires a lot of accuracy in terms of making sure Social Security numbers are correct and that names match Social Security numbers,” Wichert said.
“In a lot of instances, after a couple gets married, the wife takes on her husband’s name, but doesn’t actually change her name on her Social Security card. If that’s the case, it gets rejected when you e-file.
“When it’s e-filed, the IRS immediately verifies a lot of that information. If any of it is incorrect, or doesn’t match the IRS records, they just reject it and you have to mail it in to correct whatever error there is.”
Taxpayers who owe taxes to the IRS are less likely to use e-filing, Wichert said, even though they aren’t required to send in or authorize their payment until April 15.
“Usually, we tell people if you owe money, we’re not going to e-file,” Wichert said. “A lot of people feel, and so do we to some extent, if you have to send in a check, you want to send it in with the whole return. People don’t like to send an obscure check with a payment voucher.”
E-filing provides payment options other than mailing the check. Payments can be made electronically, too.
If you have a balance due, you can e-file and pay in a single step by authorizing an electronic funds withdrawal from your bank account.
Another option is to pay by credit card.
The Electronic Federal Tax Payment System offers a third option for paying federal taxes. Through EFTPS, you can schedule recurring payments for withdrawal from your bank account.
But Wichert has found that many his clients are hesitant about authorizing automatic withdrawals.
“You can have it automatically withdrawn from your account, and they’ll withdraw it on the 15th of April,” he said. “But a lot of people don’t like money to be just taken out of their account. And I’ve run into a few instances where more money is taken out than should be-which isn’t good at all.”
A more common concern about e-filing is the security of information. Wichert said professional tax preparers who offer electronically filing actually send tax returns through their software provider.
“It’s not done directly through the Internet,” he said.
Even individuals who file on their own through the IRS Web site are linked to private software companies that provide electronically filing services-without charge-through what is called the Free File Alliance, LLC.
The IRS Web site states that once you choose a particular company, you will be sent directly to the company’s commercial Web site.
“The government believes that private industry, given its established expertise and experience in the field of electronic tax preparation, has a proven track record in providing the best technology and services available,” according to the Web site.
Wichert said he is confident that information sent in electronically is secure-at least through the software provider his company uses.
“I’m very comfortable with using it,” he said.
Filing returns electronically isn’t limited to individuals who would normally use a simple return such as the 1040EZ, as some people assume.
“Pretty much anybody can e-file,” Wichert. “They’ve even gone so far that you can e-file partnership and corporation returns. We haven’t done that much, for whatever reason. Mostly we focus on individual returns. But you can e-file almost any return you want.”
He said individuals can electronically file their return on on their own through the IRS Web site, but if their tax situation is complicated, they likely will need a professional preparer.
“A lot of times if you want to e-file a more complex return, you have to use a service provider,” he said.
Wichert said the IRS aggressively encourages the use of electronic filing.
“The IRS is really pushing for people to e-file simply because it reduces their paperwork by huge amounts,” he said.
“Also, with all those accuracy checks going in, it eliminates a lot of paper for them. If it’s by mail, there’s a lot more correspondence. If it’s rejected when it’s e-filed, you get it corrected right away.”
Wichert said most professional tax preparers will offer electronic filing.
“I recommend it for anybody- especially if you’re getting a refund.”
E-filing state taxes
In January 2003, the Kansas Department of Revenue began offering taxpayers the opportunity to securely file their Kansas individual income taxes through the Internet, 24 hours a day, seven days a week.
The service can be found on the state’s home page at www.accessKansas.org.
“Electronically filed returns allow the department to process returns much more efficiently, critical in light of the state budget, and eliminate manual errors generally associated with paper returns,” said Secretary Stephen S. Richards of the KDR.
The WebFile program performs most calculations automatically. It will provide a confirmation number and a printable copy of the return, and nothing needs to be mailed to the Kansas Department of Revenue
To access the application, Web filers use their Social Security number and one of the following three numbers-a Personal Identification Number (PIN) provided on the mailing label of their Kansas tax booklet, last year’s individual income tax original refund amount, or last year’s balance due amount.
Electronically filed returns with a refund and bank account information can be deposited directly into taxpayers’ bank accounts in 10 business days, compared to eight weeks for paper returns.
If a balance is due, WebFilers can pay by credit card for a fee-MasterCard, Discover or American Express-with the amount immediately billed to the card, with an electronic check, or by regular check/money order along with a K40V payment voucher.
The electronic check option is a free service that allows taxpayers to electronically file anytime but debits the corresponding bank account April 15.
The KDR (www.ksrevenue.org) worked in partnership with the Information Network of Kansas, Inc., for development of WebFile.