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Top 5 reasons to file taxes online

The Internal Revenue Service is putting even more push in 2003 behind its annual campaign to get more people to file their taxes online. An extensive advertising and public relations campaign about e-filing — including messages in the annual tax packages mailed out to taxpayers — will reach most Americans prior to April 15.

Overall, 47 million returns, or 36% of all individual returns, were filed online in 2002. The IRS is hoping to push that number higher in 2003 as part of its eventual goal of having 80% of all individual returns sent electronically.

You can't file electronically this year if you do business as an S corporation or a C corporation. But unincorporated sole proprietors can e-file, as can one-person limited liability companies (LLCs) choosing to be taxed as a partnership.


Here are 5 potential e-filing benefits for those and other taxpayers.

  1. You should get a faster refund. The IRS says that businesses and individuals who e-file will typically get their refunds within 14 days. Folks who mail in their returns can wait as long as six weeks for a check. If you want to file a paper return, there's an in-between option that can cut your waiting time for refunds. On page 2 of your Form 1040, you can request that any refund be directly deposited into your bank savings or checking account. That will slice one to two weeks off of your wait.

  2. You can file from the convenience of your home PC. If you do your own tax returns using one of the widely available consumer tax programs, you can send in your return directly from your family or home-business desktop PC. About 9.4 million people filed returns from their own computers last year. Click here for a free demo.

  3. There will be fewer IRS employee errors. This is one of those seemingly rare cases where what's good for the IRS is good for you also. Electronically filed returns don't have to be keypunched into the IRS's database. That means the IRS can hire fewer employees. It also means that you don't have to worry about whether your data has been accurately transferred. No keypunch errors and no IRS notices based on incorrectly entered information. That's a win-win.

  4. There will be fewer taxpayer errors. Some basic taxpayer mistakes — missing or incorrect Social Security numbers, for example — will result in the IRS computers rejecting an e-filed return. You can usually fix and re-send the corrected returns. That's better than sending in an incorrect paper return and getting a letter from the IRS several months later.

  5. You can piggyback your state e-filing. In most cases, if you live in a state with an income tax, you can file online with your state at the same time you send in your federal return. The IRS will take the information you've sent and forward the appropriate data on to your state tax agency. Combined federal-state e-filing is available for taxpayers in 37 states and the District of Columbia. Click here for more information on how to prepare your federal and resident state tax returns online


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