Electronic Filing (E-File) Definition, Options, and Advantages (2024)

What Is Electronic Filing (E-File)?

Electronic filing is the process of submitting tax returns over the Internet using tax preparation software that has been preapproved by the relevant tax authorities, such as the U.S. Internal Revenue Service (IRS) or the Canada Revenue Agency.

The convenience and efficiency of e-filing have made it increasingly popular in recent years. The IRS says e-filing speeds up tax refunds and helps to avoid delays.

Key Takeaways

  • Electronic filing is the process of submitting tax returns via the Internet.
  • It's available from professional tax preparers, through guided preparation software that has been preapproved by the Internal Revenue Service (IRS), or free fillable forms on the IRS website.
  • It allows taxpayers to file taxes online at their convenience and speeds up refunds while reducing errors.

How Electronic Filing (E-File) Works

Taxpayers can file their returns directly on the IRS website, submitting fillable forms using IRS Free File. Those with an adjusted gross income earned in 2023 of $79,000 or less can alternatively use the Free File site to access the free e-filing services of IRS software partners with guided tax preparation, including a Spanish-language option.

A taxpayer has the option of filing the return using any tax preparation software with e-filing functionality or hiring the services of tax professionals who use similar software. The IRS Free File site has a search feature to help taxpayers find an authorized e-filing provider in their area.

Certain taxpayers may file their federal tax returns for free directly with the IRS through the Direct File program. This service is available to people who lived in the following states in 2023: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming. Tax filers must submit state tax returns separately. Refer to theIRS websiteto see if you qualify.

Benefits of Electronic Filing

E-filing saves the tax agency time and money because it transmits a return's data directly to its computers, significantly reducing input errors. Filing electronically with tax preparation software also helps to reduce taxpayer calculation errors and missing entries, the IRS says.

Most taxpayers who e-file and provide direct deposit information can expect to receive any due refund within 21 days if there are no issues with their tax return, according to the IRS.

Another benefit of e-filing is that the tax filer receives an acceptance or rejection notice within 48 hours—usually within 24 hours—of transmitting the tax return. Acceptance is proof that the documents have been received and are in the system, while a rejection alerts the taxpayer that the return has not been accepted by the IRS.

The rejection notice will include information on what needs to be corrected on the return to make it so that it is acceptable. If you e-filed before the tax due date but are rejected after it, then there is a five-day grace period for correcting and resubmitting your return. After that, you must send in a corrected paper return.

Limitations on E-Filing

The IRS recommends only taxpayers who are comfortable doing their own taxes e-file without help from a professional.

IRS Free File is only available for returns for the most recent tax year. Prior-year returns going back two years can still be filed electronically by registered tax preparers.

The IRS accepts e-filed returns for the most recent year until a November cutoff date typically announced in October, subject to the same timeliness rules as paper returns.

An electronic filing could be rejected over mistakes in entering a Social Security number or a payer's identification number, an omitted form, or a misspelled name. Returns can typically be e-filed again once such errors are fixed, the IRS says. If all else fails and the deadline looms, send in a paper return instead.

How Can You Electronically File Your Taxes?

The simplest way to electronically file your taxes is by using software such as TurboTax or TaxAct, among many others. These services allow you to fill in the information page by page, with instructions and prompts created by the tax software. Once complete, the software allows you to send off your return to the IRS. You can also use certain systems provided by the IRS to file electronically.

What Are the Disadvantages of E-Filing Taxes?

There are no real disadvantages to e-filing taxes. Most tax software saves your information even if you accidentally close out of the program or your computer crashes. If your taxes are extremely complicated, that may be the only limitation to e-filing.

When Do I Need to File My Income Tax?

For 2023 taxes, filing is due by April 15, 2024. If you need an extension, you must also request it by this date. If your extension is granted, you then have till Oct. 15, 2024, to file your taxes.

The Bottom Line

You can electronically file your tax returns with approved software that makes the entire tax filing process much simpler. Most software prompts you through the questions that are needed to file a complete and correct tax return.

Electronic Filing (E-File) Definition, Options, and Advantages (2024)

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