Today, for the first time, I filed my tax returns electronically. Last year I had used an online service (TurboTax) to do my returns but I didn’t file electronically. This year I took the plunge, and it was quite convenient.
Last year was the first year I ever used an online service and, let me tell you, that totally rocked! In January of this year TurboTax sent me an email reminder and I was able to start working on my taxes right away (I didn’t even have to pay anything then; you pay only when you complete your return and e-file or print it out). As I received information I simply logged in and updated my 2007 return. One nice thing was initial summary page, which displayed each category with the amount from last year. So, I could quickly see if I was missing something or if a number was out of whack from the number from last year.
The e-filing part was simple. After you pay TurboTax ($99 for fed return, and $39 for the state one) you can e-file. The program checks your return and cautions you if something needs to be re-examined before you upload. You can even choose to have your return examined by a tax professional (probably located in India), but I opted to skip that step since the review that was done automatically seemed pretty thorough. This may seem obvious, but when you e-file you don’t physically sign the return. So how do you authenticate to the IRS?
Answer: you are prompted to enter the amount of your Adjusted Gross Income from the appropriate line of your prior tax return. Since I had done my return online Turbotax knew the answer to this question and filled it in automatically. I checked my old return just to make sure it was right (it was).
To pay your taxes you still have to mail in a check. You can pay by credit card, but they pass the credit card fee on to you so you don’t want to pick that option unless you have to finance your payment.
After I filed my return I went to the nearby postal service store to send a package to my dad. The folks behind the counter were rushing around like a fire alarm had gone off. Finally a guy came up to the counter and said that he was sorry but the tax filing deadline was making everything crazy. I thought that was strange. Don’t people just drop off their return to be mailed? What else is there for the employees to do except dump the mail into the proper bin?
He said that the chaos was caused by people wanting to send their tax return in by certified mail. Why would they want to do that, I asked? The guy straightened up as he assumed a more authoritarian bearing, and then explained the situation. “You see, if you send a certified letter then the letter becomes a ‘legal document.’ And the IRS has to sign for the letter. If they lose the return then you can show the signature card and have your lawyer tell them that it’s their fault.”
I didn’t say a word, other than to thank him for this valuable information. Inside, of course, I was laughing uncontrollably.
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* E-filing is essentially another mode of filing your income tax return, in addition to the popular mode of printing and submitting your return at the income tax counters. It is a two step process:a. Prepare your return using tax preparation software: Enter your income tax data, such as, PAN, income, deductions, and TDS. Review your data for completeness and accuracy; and, generate your electronic return in XML format.b. Upload your XML format return on income tax department website. Upon successful uploading, it will generate an acknowledgement form called ITR-V. If you do not use digital signatures, then you have to submit the ITR-V at the income tax counter.* If you do not wish to e-file, then you can print your ITR1 or ITR2 and deposit it at the nearest income tax office or counter.taxspanner.com
It’s been a few years since my law school tax class, but I do remember that sending the tax return by certified mail is sometimes a good idea. I think the reasoning is that the certified mail certificate could be used as “proof of mailing”. As I recall, the advice was given in the limited context that if your eligibility for some beneficial tax treatment depended upon the return being filed by the deadline, then you should consider sending the return via certified mail. That way, even in the unlikely event your return got lost in the mail, you could produce evidence to the IRS that you had placed the return in the mail by the deadline and your eligibility for the beneficial tax treatment would likely be preserved.
I’ve e-filed the last three years with TurboTax online and I think it’s an incredibly convenient service.
Nathalie: here’s the deal. I have no problem with sending your tax return in by certified mail. If you’re willing to endure the extra hassle and it makes you feel better that’s good. I don’t because 99% of the time the mail gets to its destination and I’m pretty sure that the IRS has a good system for processing the mail it receives. If it didn’t then the U.S. government couldn’t afford to waste all of the money that we send it. In short, the IRS is ruthlessly efficient at collecting money.
Now what about me? I’m a little bug in this vast ecosystem, and my job is to send in my form. And my money. So I do this and I do it by ordinary mail. If I see the check clear then I know that the Borg has received and, once again, ruthlessly processed my forms. If I don’t see the check clear then I’ll know that there is a problem. And in that unlikely situation it won’t matter much if I have a certified return card: all that will show is that I sent ‘something’ to the IRS. They will take the position that I didn’t send them my form or my money.
I can say I did, and blather on but the fact will remain that no money was deducted from my account. So my best indicator is the bank account. I laughed at what the clerk said because he said it with such an air of assurance that his lawyer would defeat the IRS easily by reference to the receipt. I am a lawyer, and I’ve now explained why that claim is untrue. The funny part is the notion that the IRS can be quickly dispatched by certified mail receipts and lawyers.
Anyone who has dealt with the IRS (especially during an audit) knows the folly of that observation.
I don’t get it. Please explain. Even H&R Block told me to send it certified mail.
I’ve been using TurboTax for years, and I’ve e-filed for I think that last 4 or 5 years. One thing I like about TurboTax is that every year, it’s improved. This year, for instance, it came with a built-in thing for calculating the value of in-kind charitable donations (e.g. that bag of clothes you donated to Good Will). I think there’s a lesson there about not being complacent, about constantly seeking ways to improve your product or service.