Individual Filer Information IRS e-file is part of the electronic process that enables taxpayers and tax preparers to file tax returns electronically more accurately, quickly and efficiently than on paper. Getting started with e-file is easy – 99 percent of forms are available online and more than 150,000 tax preparers nationwide are authorized to e-file taxes on behalf of their clients. IRS e-file provides taxpayers with faster refunds and the option to schedule electronic payment withdrawals for as late as April 15. It also gives filers peace of mind by providing a proof of receipt and quickly identifying errors, which allows the taxpayer or tax preparer to correct mistakes before the form is filed. In addition, more than 60 percent of Americans are eligible for Free File [http://www.irs.gov/efile/article/0,,id=118986,00.html], allowing them to electronically prepare and file their taxes for free. To determine eligibility, visit www.irs.gov. Facts About Individual Filers and IRS e-file Quick Facts This year the IRS expects that for the first time, more than 50 percent of federal tax forms will be e-filed. In 2004, IRS e-file usage grew by a record 15.4 percent. In 2004, individual taxpayers accounted for 30 percent of e-filed returns, an increase of 22 percent over the previous year. Ninety-nine percent of IRS individual income tax forms and schedules – including the majority of forms for the self-employed – are available through IRS e-file. IRS e-file is 99 percent accurate. More than 150,000 tax preparers nationwide are authorized to e-file taxes on behalf of their clients. Research shows that more than 80 percent of taxpayers who have tried e-file are “very satisfied” with e-file’s benefits. Research shows that 83 percent of individual taxpayers who use IRS e-file remained loyal and e-filed the following year. In 2004, 61 million individual tax returns were e-filed. That’s a 15.8 percent increase over the previous year. In 2004, 42.7 million individual returns were e-filed by tax professionals. That’s a 16.3 percent increase over the previous year. In 2004, tax preparers accounted for 70 percent of all e-filed returns, an increase of 15.8 percent over the previous year. More than 60 percent of individual filers – or 78 million people – are eligible for Free File [http://www.irs.gov/efile/article/0,,id=118986,00.html], which allows qualified Americans to prepare and electronically file their taxes for free. Electronic Payments Individuals may e-file their taxes early in the tax season and schedule an electronic funds withdrawal from their bank account or credit card for as late as April 15. Refunds On average, taxpayers who use IRS e-file receive their refunds in half the time of paper filers and in as few as 10 days with Direct Deposit. In 2004, 48,956,000 taxpayers used Direct Deposit to receive their refund, a 10.8 percent increase over the previous year. Refund Tracking Through the Where’s My Refund [http://www.irs.gov/individuals/article/0,,id=96596,00.html] feature on www.irs.gov, taxpayers can track the status of their refund online at anytime. To do so, they will need to enter the following personal identification information as shown on their return: 1. Social Security Number (or IRS Individual Taxpayer Identification Number) 2. Filing Status 3. The exact refund amount – dollars and cents The personal identification information is used only for the purpose of tracking the refund. More Facts and Information For additional information, visit www.irs.gov. Free File Overview Introduced in 2003, Free File [http://www.irs.gov/efile/article/0,,id=118986,00.html] allows qualified taxpayers to prepare and e-file their own tax returns for free using commercially available tax preparation software. Last year, 3.5 million Americans took advantage of Free File. Who is Eligible? More than 60 percent of American taxpayers – or 78 million people – are eligible to use Free File [http://www.irs.gov/efile/article/0,,id=118986,00.html]. Taxpayers can review tax software provider offerings and determine if they are eligible by visiting the Free File page of www.irs.gov. More Information For additional information, visit www.irs.gov. Available Forms Ninety-nine percent of IRS individual income tax forms and schedules are eligible for IRS e-file, including: Form 1040 – U.S. Individual Income Tax Return Form 1040 (Schedule A & B) – Itemized Deductions and Interest & Dividend Income Form 1040 (Schedule C) – Profit or Loss from Business (Sole Proprietorship) Form 1040 (Schedule C-EZ) – Net Profit from Business (Sole Proprietorship) Form 1040 (Schedule D) – Capital Gains and Losses Form 1040 (Schedule E) – Supplemental Income and Loss Form 1040 (Schedule EIC) – Earned Income Credit Form 1040 (Schedule F) – Profit or Loss From Farming Form 1040 (Schedule H) – Household Employment Taxes Form 1040 (Schedule J) – Farm Income Averaging Form 1040 (Schedule R) – Credit for the Elderly or the Disabled Form 1040 (Schedule SE) – Self-Employment Tax Form 1040A – U.S. Individual Income Tax Return Form 1040A (Schedule 1) – Interest and Ordinary Dividends for Form 1040A Filers Form 1040A (Schedule 2) – Child and Dependent Care Expenses for Form 1040A Filers Form 1040A (Schedule 3) – Credit for the Elderly or the Disabled for Form 1040A Filers Form 1040EZ – Income Tax Return for Single and Joint Filers With No Dependents Form 1099-G – Certain Government and Qualified State Tuition Program Payments Form 1099-R – Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Form W-2 – Wage and Tax Statement Form W-2G – Certain Gambling Winnings Form W-2GU – Guam Wage and Tax Statement Form 56 – Notice Concerning Fiduciary Relationship Form 970 – Application to Use Lifo Inventory Method Form 982 – Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Form 1116 – Foreign Tax Credit (Individual, Estate, or Trust) Form 1310 – Statement of Person Claiming Refund Due a Deceased Taxpayer Form 2106 – Employee Business Expenses Form 2106-EZ – Unreimbursed Employee Business Expenses Form 2120 – Multiple Support Declaration Form 2210 – Underpayment of Estimated Tax by Individuals, Estates and Trusts Form 2210F – Underpayment of Estimated Tax By Farmers and Fishermen Form 2350 – Application for Extension of Time to File U.S. Individual Income Tax Return Form 2439 – Notice to Shareholder of Undistributed Long-Term Capital Gains Form 2441 – Child and Dependent Care Expenses Form 2555 – Foreign Earned Income Form 2555EZ – Foreign Earned Income Exclusion Form 2688 – Application for Additional Extension of Time To File U.S. Individual Income Tax Return Form 3468 – Investment Credit Form 3800 – General Business Credit Form 3903 – Moving Expenses Form 4136 – Credit for Federal Tax Paid on Fuels Form 4137 – Social Security and Medicare Tax on Unreported Tips Form 4255 – Recapture of Investment Credit Form 4562 – Depreciation and Amortization Form 4563 – Exclusion of Income for Bona Fide Residents of American Samoa Form 4684 – Casualties and Thefts Form 4797 – Sales of Business Property Form 4835 – Farm Rental Income and Expenses Form 4868 – Application for Automatic Extension of Time to File U.S. Individual Income Tax Return Form 4952 – Investment Interest Expense Deduction Form 4970 – Tax on Accumulation Distribution of Trusts Form 4972 – Tax on Lump-Sum Distributions Form 5074 – Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI) Form 5329 – Additional Taxes on Qualified Plans (including IRAs) and Other Tax Favored Accounts Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations Form 5471 (Schedule J) – Accumulated Earnings and Profits (E and P) of Controlled Foreign Corporation Form 5471 (Schedule M) – Transactions Between Controlled Foreign Corporation and Shareholders or Other Related Persons Form 5471 (Schedule N) – Return of Officers, Directors, and 10 Percent or More Shareholders of a Foreign Personal Holding Company Form 5471 (Schedule O) – Organization or Reorganization of Foreign Corporation, and Acquisitions and Dispositions of Its Stock Form 5713 – International Boycott Report Form 5713 (Schedule A) – International Boycott Factor (Section 999(c)(1)) Form 5713 (Schedule B) – Specifically Attributable Taxes and Income (Section 999(c)(2)) Form 5713 (Schedule C) – Tax Effect of the International Boycott Provisions Form 5884 – Work Opportunity Credit Form 6198 – At-Risk Limitations Form 6251 – Alternative Minimum Tax - Individuals Form 6252 – Installment Sale Income Form 6478 – Credit for Alcohol Used as Fuel Form 6765 – Credit for Increasing Research Activities Form 6781 – Gains and Losses From Section 1256 Contracts and Straddles Form 8082 – Notice of Inconsistent Treatment or Amended Return Form 8271 – Investor Reporting of Tax Shelter Registration Number Form 8275 – Disclosure Statement Form 8275-R – Regulation Disclosure Statement Form 8283 – Noncash Charitable Contributions Form 8379 – Injured Spouse Claim and Allocation Form 8396 – Mortgage Interest Credit Form 8582 – Passive Activity Loss Limitations Form 8582-CR – Passive Activity Credit Limitations Form 8586 – Low-Income Housing Credit Form 8594 – Asset Acquisition Statement Form 8606 – Nondeductible IRAs and Coverdell ESAs Form 8609 – Low-Income Housing Credit Allocation Certification Schedule A – Annual Statement Form 8611 – Recapture of Low-Income Housing Credit Form 8615 – Tax for Children Under Age 14 Who Have Investment Income of More Than $1,400 Form 8621 – Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund Form 8689 – Allocation of Individual Income Tax to the Virgin Islands Form 8697 – Interest Computation Under the Look-Back Method for Completed Long- Term Contracts Form 8801 – Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts Form 8812 – Additional Child Tax Credit Form 8814 – Parent's Election to Report Child's Interest and Dividends Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989 Form 8820 – Orphan Drug Credit Form 8824 – Like-Kind Exchanges Form 8826 – Disabled Access Credit Form 8828 – Recapture of Federal Mortgage Subsidy Form 8829 – Expenses for Business Use of Your Home Form 8830 – Enhanced Oil Recovery Credit Form 8834 – Qualified Electric Vehicle Credit Form 8835 – Renewable Electricity Production Credit Form 8839 – Qualified Adoption Expenses Form 8844 – Empowerment Zone Employment Credit Form 8845 – Indian Employment Credit Form 8846 – Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips Form 8847 – Credit for Contributions to Selected Community Development Corporations Form 8853 – Archer MSAs and Long-Term Care Insurance Contracts Form 8859 – District of Columbia First-Time Homebuyer Credit Form 8860 – Qualified Zone Academy Bond Credit Form 8861 – Welfare-to-Work Credit Form 8862 – Information To Claim Earned Income Credit After Disallowance Form 8863 – Education Credits (Hope and Lifetime Learning Credits) Form 8865 – Return of U.S. Persons With Respect to Certain Foreign Partnerships Form 8865 (Schedule K-1) – Partner's Share of Income, Credits. Deductions, etc. Form 8865 (Schedule O) – Transfer of Property to a Foreign Partnership Form 8865 (Schedule P) – Acquisitions, Dispositions, and Changes of Interests in a Foreign Partnership Form 8866 – Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method Form 8873 – Extraterritorial Income Exclusion Form 8874 – New Markets Credit Form 8880 – Credit for Qualified Retirement Savings Contributions Form 8881 – Credits for Small Employer Pension Plan Startup Costs Form 8882 – Credit for Employer-Provided Child Care Facilities and Services Form 8884 – New York Liberty Zone Business Employee Credit Form 8885 – Health Insurance Credit for Eligible Recipients Form 9465 – Installment Agreement Request Federal/State e-file Overview Currently, 37 states and the District of Columbia participate in the Federal/state e-file program [http://www.irs.gov/efile/article/0,,id=97915,00.html], through which taxpayers can electronically file federal and state income tax returns together. Tax software automatically transfers relevant data from the federal return to the state return as the information is entered. How it Works The electronic filing software places federal and state return data in separate packets. These packets are then transmitted to the IRS in one electronic "envelope." The IRS functions as an electronic post office for the participating state, which processes the electronic state return. Although federal and state returns are filed simultaneously, federal and state tax payments, if required, are not combined. Federal tax payments can be made via electronic withdrawal, credit card or EFTPS. Some participating states accept electronic withdrawal or credit cards payments directly. Participating States View the list of participating states [http://www.irs.gov/efile/article/Q2]on www.irs.gov to see where federal/state e-file is available. More Information For additional information, visit www.irs.gov. Using IRS e-file to File Your Own Taxes Research shows that 80 percent of taxpayers who have tried IRS e-file are “very satisfied” with its benefits. It’s easy to e-file your personal income tax return using the following guidelines. 1. Gather the necessary materials needed to e-file your individual tax return. (Note, the following list is simply a guideline to help you prepare, and is not meant to be all-inclusive.) Social Security Numbers for yourself, your spouse and any dependents Copy of last year’s tax return Form W2, Wage and Tax statement from all employers for you, your spouse and any dependents Bank account numbers (for Direct Deposit or to pay electronically) Unemployment compensation Forms 1099-G Income receipts from rental real estate, royalties, partnerships, S corporations, S trusts Social Security benefits Other income Form 1098 for home mortgage interest and points 1099 forms for dividends, retirement, or other income, or any 1099 forms with income tax withholding Casualty and theft losses Job expenses Medical and dental expenses All receipts pertaining to your small business Receipts for charitable contributions and gifts Receipts from taxes you paid, such as state and local taxes, real estate taxes and personal property taxes 2. Learn more about Free File [http://www.irs.gov/efile/article/0,,id=118986,00.html] and determine if you are eligible. Free File is online tax preparation and electronic filing through a partnership agreement between the IRS and the Free File Alliance. More than 60 percent of taxpayers – 78 million people – are eligible for Free File. You must be a U.S. citizen or resident alien to be eligible for Free File. Log on to www.irs.gov to determine your eligibility (be aware that even if you qualify for free federal filing, you may have to pay to file your state return). Review the listing on www.irs.gov of commercial companies providing Free File. Determine your eligibility for each commercial company by reading the short description of their eligibility requirements. 3. Select a filing company. If you are eligible for Free File, link to the Free File company service of your choice from www.irs.gov (by going directly to a company’s web site, you may not get the free offer). If you are not eligible for Free File, you can still electronically file your taxes with the company of your choice, either online or by downloading software to your personal computer. If you are having trouble deciding which company to use, try the interactive help tool, “Guide Me To a Service,” to narrow down the possible companies offering tax preparation services. 4. Prepare and file your federal income tax return. Through proprietary software, the company you’ve chosen to file your taxes converts the file you send to a format that meets IRS specifications and transmits it to the IRS. The IRS then checks the return and notifies the transmitter (who then informs you) whether the return has been accepted or rejected. This electronic return verification is a unique benefit of IRS e-file. If the return was not accepted, the electronic return transmitter, as part of their customer service, will assist you in the correction process. If you choose not to use the Self-Select PIN [http://www.irs.gov/efile/article/0,,id=101246,00.html] as your signature, or you have certain paper documents to submit, you will need to mail in a paper signature document. Send the completed Form 8453-OL, U.S. Individual Income Tax Declaration for an IRS e-file Online Return, to the appropriate IRS service center when the electronic return is accepted. Signing this document indicates you have verified and agree with the return information. Refunds should be in your savings or checking account within two weeks if you choose Direct Deposit and in about three weeks if you choose a paper check. If you owe money, you can make payment by authorizing an electronic funds withdrawal from a checking or savings account, by credit card or by mailing a check or money order (made out to the United States Treasury) using Form 1040-V, Payment Voucher. Working with a Tax Preparer and IRS e-file More than 150,000 tax preparers nationwide are authorized to e-file taxes on behalf of their clients. Last filing season alone, 43.1 million individual returns were e-filed by tax professionals. Here’s how it works: 1. Make sure your tax preparer is an authorized IRS e-file provider. Tax preparers who are accepted into the IRS electronic filing program are called "Authorized IRS e-file Providers,” or Electronic Return Originators (EROs). If you need help locating a tax preparer, visit www.irs.gov. The IRS does not charge a fee for electronic filing. Some EROs charge a fee for providing this service to their clients while others may offer it free of charge. However, this fee cannot be based on any figure from the tax return. Fees vary depending upon the tax preparer you choose and the specific services you request. 2. Gather the necessary materials to take to your tax appointment. (Note: the following list is simply a guideline to help you prepare, and is not meant to be all-inclusive.) Personal identification – Driver's license or state I.D. Social security cards for yourself, your spouse and any dependents Copy of last year’s tax return Form W2, Wage and Tax statement from all employers for you, your spouse and any dependents Bank account numbers (for Direct Deposit or to pay electronically) Unemployment compensation Forms 1099-G Income receipts from rental real estate, royalties, partnerships, S corporation, S trusts Social Security benefits Other income Form 1098 for home mortgage interest and points 1099 forms for dividends, retirement, or other income, or any 1099 forms with income tax withholding Casualty and theft losses Job expenses Medical and dental expenses All receipts pertaining to your small business Receipts for charitable contributions and gifts Receipts from taxes you paid, such as state and local taxes, real estate taxes and personal property taxes 3. Meet with your tax preparer and finalize your tax return. Taxpayers sign electronic tax returns by either using a Self-Select PIN for e-file for a completely paperless return, or by signing Form 8453. After the return is signed using a Self-Select PIN or Form 8453, the ERO will transmit the return to the IRS or to a third-party transmitter who then forwards the entire electronic record to the IRS for processing. Once received at the IRS, computers automatically check the return for errors and missing information. If it cannot be processed, it is sent back to the ERO to clarify the necessary information. Within 48 hours of electronically sending your flawless return to IRS, the IRS sends an acknowledgment to the transmitter stating the return is accepted for processing. This is your proof of filing and assurance that the IRS has your return information. The Authorized IRS e-file Provider then sends Form 8453 to the IRS. Refunds should be in your savings or checking account within two weeks if you choose Direct Deposit and in about three weeks if you choose a paper check. If you owe money, you can make payment by authorizing an electronic funds withdrawal from a checking or savings account, by credit card or by mailing a check or money order (made out to the United States Treasury) using Form 1040-V, Payment Voucher. m 1040-V, Payment Voucher.
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