We used to tempt fate by dropping off tax returns at the post office minutes before midnight on April 15. But today's professional procrastinators can practice the same brinksmanship without ever leaving the comfort of home, waiting until the appointed last moment to submit returns electronically.
But beware: This dangerous game has rules. Electronic submission of tax returns is tied to your home address, meaning that Californians can log on 3 hours later than New Yorkers and still beat the deadline. But the point of so-called e-filing is that you don't have to wait until the last minute.
The number of people filing their tax returns electronically has been increasing exponentially every year. The Internal Revenue Service reports that the trend is continuing this year. As of last week, home PC filers had submitted nearly 10.5 million returns in 2004, an increase of 22.9 percent over the 2003 total. Tax professionals had filed more than 32.2 million returns electronically, a 10.9 percent increase. And the 'Free File' program had topped 2.6 million returns, up 24 percent.
Some Pluses, Same Rules
Though e-filing has changed how people file their taxes, one fact remains static, according to the IRS: Nearly one-third of all taxpayers wait until the final weeks before the April 15 tax deadline before submitting their return.
"All aspects of electronic filing are fast and efficient," says Nancy Mathis, an IRS spokesperson. "If you file electronically and use direct deposit you can have your return in about two weeks."
If you're still running late despite the added power and convenience of e-filing, you can always e-file for an extension (and pay what you expect to owe). Another rule of the analog tax world that extends into the e-filing realm is that if you have a refund coming to you, you don't have to file by the April 15 deadline, Mathis says.
One immediate advantage of e-filing is that it prevents mathematical errors, Mathis notes. Tax preparation programs, with their built-in calculators, eliminate the biggest cause of rejected returns. And if the IRS does reject your return, the notice goes out immediately by return e-mail--so you have the chance to correct the problem without accruing excessive penalties. In particular, the quick response minimizes fallout from the most common mistake: transposing digits in a social security number.
PC World provides a comprehensive review of desktop tax software programs. Of course, online programs are available even when brick-and-mortar stores are closed; a review of leading Web-based programs is also available.
E-File Options
The IRS is trying to surmount the digital divide. People who do not own, trust, or use a PC can still enjoy the speed and accuracy of e-filing by participating in the Free File program. It's available to people above a certain age and below a certain income--typically at a local library or community center.
The Free File program uses free programs supplied by the leading tax software vendors. This may seem like pure benevolence, but it is more or less a business deal. According to Mathis, the vendors supply a certain number of free programs, and in return the IRS refrains from manufacturing its own officially sanctioned software that might eventually drive the littler guys out of business.
"A lot of people are living on low incomes, and we are making it possible to benefit from this," Mathis says.
As for payment, e-filing adds a few options. Paying by credit card is the easiest method, or you may arrange for an automatic transfer from a bank account. Likewise, refund recipients may arrange for the money to be deposited automatically to a bank account.
As technology streamlines every part of the tax process, one aspect may strike taxpayers as a dubious advantage: Any return on which the filer owes money is assessed a late fee if it is filed after the deadline.
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