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What is E-file
The United States federal government has allowed electronic filing of income tax returns through the IRS since 1986. The present-day e-file program attracted nearly 100 million taxpayers in 2009. E-file is a method through which a taxpayer can submit tax documents to the IRS and states over the Internet using tax software or a certified tax professional. In those states that require a state income tax filing, most also allow for e-filing of state income taxes. Many states actually mandate e-file as the only allowable method. Consult with your local rules or find a tax professional if you are unsure of the requirements in your state.
Today, there are two common methods to e-file. You can either e-file through a certified professional tax preparer or you can e-file from your home computer with supported-tax software. With both methods, your return is converted into a format allowable by the IRS and transmitted over the Internet to agency computers. You are provided a transmission of receipt and acknowledgment of acceptance or rejection from the IRS usually within in
a few days of your e-filing.
Through a cooperative effort between the IRS and the states, federal/state e-file is offered to taxpayers to file both federal and state returns together electronically. The Federal/State e-file option is available through tax professionals or in most states from a home computer. The software submits your federal and state return data in separate packets, which are transmitted to the IRS in one "envelope." The IRS functions as an electronic post office and forwards on the state return to the appropriate agency who processes the state electronic return.
Special State Notes
In certain states, e-filing is now mandated by state law. As of 2011, these are: Kansas, Rhode Island, Indiana, Louisiana, Maine, New Mexico, South Carolina, West Virginia, Connecticut, New York, Utah, Alabama, Massachusetts, New Jersey, California, Michigan, Minnesota, Oklahoma and Wisconsin. If you live in one of these states, you should be e-filing your return. Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas and Wyoming are all free of a state income tax, so these states do not require a tax return of any sort.