IRS e file

IRS e file is the way you should be doing your taxes.  If you’re still hanging on to old ways and using paper IRS forms then you are wasting your precious time.  There simply is no good reason anymore to avoid filing your federal income tax return electronically.  The only reason I can think of to still be using paper tax returns and filing through US mail is if you don’t have your own computer and you want to do your own taxes.  In this case then yes there is still a reason not to be e-filing.

But that’s not very many people…who do you know who doesn’t have a computer?  The elderly are a good bet for not having entered the electronic age but you’d be surprised at how many retirees live on their computers.  Or the poor…$70 a month for an internet connection is a hefty charge when you live at poverty level.  Aside from these situations, most households are connecting to the web or thinking of it, making IRS e file a growing trend.  In fact, about 100 million taxpayers file electronically now, making e-filing the norm rather than the exception.

What is IRS e File?

Let’s get our terminology correct: IRS e-file means submitting your taxes electronically.  It means NOT mailing in a paper tax return.  You can buy commercial tax prep software that compiles your tax return for you, and when you hit the submit button you’ve e filed.  You can take your W2s to a tax store and pay them to prepare your taxes.  Same thing: they enter the data then click the submit button: e filed.  You can prepare your tax return from the IRS website if you meet certain conditions.  Again: e-filed.

The Different Ways You Can e File

  1. FreeFile on the IRS website.  If you make $57,000 or less, you have lots of options.  You can use the IRS’s tax software, called Free File if you like.  It’s available online here from the IRS e file page.  It guides you through doing your taxes by asking you questions.  You type in the answer and the software starts filling in your tax forms behind the scenes.  When you’re done answering questions viola you have a electronic tax return that you can submit by clicking a button.
  2. Use Commercial Software.  Most commercial tax prep companies have the same idea: you can e file for free by using their online systems.  The IRS approves the software and they can become part of the E-File network of commercial tax prep companies you can link to from the IRS website.
  3. e File through a tax store.  Companies like H&R Block, that have storefront tax preparation services, are basically using the same type of commercial software you would be using if you chose option #2 above.  Except it’s not free.

Now that you know what e file is, what’s stopping you from filing your taxes electronically next year?



Mobile Phone

How Helpful is the IRS Phone Number?

Do you need to call the IRS?  One thing I can suggest is that if you have internet connection that’s secure and private you may want to find answers from the IRS website first.  It’s going to be much faster and more convenient as well.  Calling the IRS phone number might mean you’ll be on hold for long periods of time.  Also, there are some things for which calling the IRS will not produce any more results than will consulting the IRS website.  You will feel pretty frustrated when, after waiting 20 minutes on hold with the IRS they aren’t able to tell you anything you didn’t already know from browsing their website!  Here’s a quick rundown of when it’s worth it to call the IRS phone number and when it’s not.

When It’s Worth it to Call the IRS Phone Number

If you are preparing your own taxes and you just can’t understand something on let’s say the 1040 Instructions, then yes this is when it’s a good idea to call the IRS phone number.  I’ve actually had pretty good luck with getting helpful answers from IRS employees answering the phone.  Make sure you are ready when they pick up, with a clear question.  Think it through and plan how you’re going to phrase your question and you should have good results.  The IRS phone number for getting help with preparing your taxes is:

IRS tax help (for individuals) phone number:    (800) 829-1040

This free tax help is available Monday through Friday from 7am to 7pm.  Pretty good service if you ask me.  There’s a separate IRS phone number for help if you’re doing business taxes (the 1120 for corporations, for example).

IRS phone number (for businesses): (800) 829-4933

When It’s Not Worth the Wait to Call the IRS Phone Number

If you just want to see where your IRS refund is, then don’t call the IRS phone number.  The IRS has put time and money into developing its online IRS Refund Tracker.  This will tell you exactly where your refund will be that day.  Yes it might say processing for day after day but you won’t get any further information from the IRS when you call them.  In fact, you won’t get a person.  You’ll get an automated service that will just do what you did on the tracker.  And if you call the help line or any other IRS phone number where you get a live person on the other end, all the person answering the phone will be doing will be to log into the same database you did when you used the IRS Refund Tracker.

There is an IRS Refund Hotline.  It’s mainly for people who don’t have internet or who can’t use it for some reason.  Here’s the number:

IRS Refund Hotline: (800) 829-1954

That number will connect you to a machine and you’ll log in and get automated information on the whereabouts of your IRS refund.  It’s available 24/7.




We All Love to Shop, But Save Money for Your Tax Bill with IRS Payment Plan

Love buying stuff?  You’re not alone!  We all love to shop, and I don’t care who you are: you have your weak spot too.  Even the most frugal amongst us: try as we may, we still let loose once in a while and splurge.  It’s human nature, after all.

Why People Pay Their Taxes Late: What Happened to Us?

But as a nation we have a problem with spending.  We’ve let our obsession with purchasing things get out of hand.  Our collective materialistic nature was over-indulged in the heyday of easy lending.   Loose oversight on mortgages, home flipping,  and easily-procured home equity loans meant lots of people were rolling in cash.  What did they do with it?  Spend spend spend!

We got used to buying stuff.  Lots of stuff.  But now the country has sobered up, lending rules are tighter, and debt is catching up to a lot of people.  It’s harder to get a credit card, harder to get a loan, and bills keep mounting.

Don’t Be Late With Your Tax Bill!

So when it comes to your tax bill with the IRS, some people are in a jam.  If you owe money to Uncle Sam after filing your Federal income tax return, what happens if you can’t pay your tax bill?

Well your credit score is affected for one.  If you still care about getting future loans, buying a home with a mortgage, or getting credit cards then yes your credit score still does matter.  It even affects what mortgage rate you’ll get when you’re finally ready to buy a home.  Having a low credit score will cost you money in the long run.

For another, the IRS will charge you more money too.  You’ll be assessed late fees and penalties for not paying your taxes or for paying your taxes late.

Get an IRS Payment Plan

So what’s a person to do?  Get an IRS payment plan, that’s what.  The IRS doesn’t necessarily want you to get into trouble with the credit reporting agencies and ruing your financial life.  They want to work with you so they get their money and you come out unscathed.  That’s why they have payment plans, also called installment plans.

There Are Two Types of IRS Payment Plans

There’s an IRS installment plan, which is essentially a loan from the IRS that can last as long as six years.  Of course, you’ll be paying interest and fees but far less than if you don’t work out any IRS payment plan at all.

Then there’s a four  month plan, or 120 days.  You pay off your tax ill in that amount of time and of course since it’s a shorter time frame you get charged less interest and no fees.

Let’s take a look at both.

An IRS Installment Plan

If your IRS debt is less than $50,000 you can work out an IRS installment agreement with them.  The Online Payment Agreement Application is available on the IRS website here.  You’ll need your bank account information so you can set up automatic payments with the IRS.

Here are your options for paying on an IRS Payment Plan:

  1. This IRS payment agreement will cost you $52 to set up direct withdrawal from your bank account
  2. …or $105 to have it automatically taken from your paycheck
  3. If your income is low enough, the fee is reduced to $43.  Use IRS Form 13844 Application For Reduced User Fee For Installment Agreements.

You can set up your IRS payment plan on your credit card, too.

You can apply for an IRS Payment plan by going online via the link above, by calling the IRS at the number on the bill you got from them, or by filling out the paper form, IRS Form 9465 Installment Agreement Request

Get 120 Extra Days to Pay Your IRS Bill

If you think you just need some extra time to come up with the money for your tax bill, you can enter an IRS agreement plan for 120 extra days.  That’s four months to get your money together.  You aren’t charged any fees for this agreement but you still get penalties and interest.