E-file volume has swelled over its 25 years in existence and over the course of time, the IRS has safely processed just over 1 billion tax returns. If not familiar, e-file stands for electronic file which is a method used to electronically send the return versus the 'old fashioned' way of sending a paper return through the mail.
From a trickle of returns in 1986 to the majority of US personal tax returns filed in 2011, e-file brings many benefits to the taxpayer. The IRS states that the e-file error rate is around 1% of tax returns, whereas 20% of returns filed on paper contain errors. Additionally, taxpayers receive refunds much faster with electronically filed returns than the paper/mail version. For those interested in our environment, e-file saves thousands of sheets of paper vs. filing on paper and mailing the return. And for those concerned about our government's budget, e-file saves time vs. a paper return that has more manual entry. Plus, for taxpayers who owe, they have a new option created by e-file, and that is to file electronically, but wait until the deadline to 'ink a check'. Of course, even inking a check can be replaced by other IRS electronic payment methods.
The next evolution is already rolling out and is called MeF or Modernized e-file. MeF generates an acknowledgement within minutes, as opposed to the e-file turn-around of 48 hours. This allows taxpayers to correct any errors more quickly. In the future, taxpayers due a refund may receive them in a few short days versus just over a week if the IRS couples MeF with CADE (Customer Account Data Engine), a new system scheduled to replace IRS master file tapes.
A handful of situations exist where e-file and/or MeF are not available. If the taxpayer is not sure how to file, then they should consult a professional to determine the best option. In general, make tax time simple by electronically filing your return.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.