Accounting and Finance Foundations

Unit 9

Accounting and Finance Foundations Unit 9: Taxes 725

Taxes

Chapter 21

Student Guide

Until late in the 20th Century, the only way for taxpayers to prepare their tax returns was with pen and paper,

and the only way for them to send their tax returns to the Internal Revenue Service was via the U.S. postal

system. Fortunately, technology has advanced significantly in the last couple of decades. As a result, we

have a number of more advanced options for preparing and sending

our returns, including computer software, Internet web sites, and

even the telephone.

There are many benefits to filing your return electronically. Using tax-

preparation software to complete and file your taxes, for instance,

can increase data accuracy and security dramatically. In fact, the

error rate for an electronically prepared return is just half of a percent,

while the error rate for a paper return is a whopping 21%.

Also, submitting your return to the IRS electronically is virtually

paperless, and you’re likely to receive your refund much more

quickly than in the past—especially if you request that your refund

be directly deposited into your bank account. Another perk associated with preparing and transmitting your

tax return electronically is that it is usually less expensive. Plus, you often have the option of transmitting

your federal and state returns at the same time.

You have several options for preparing and filing your tax return electronically:

    • Commercial tax software such as Turbo Tax

    • Online tax-preparation sites

    • The IRS’s web-based freefile

    • Authorized IRS e-file providers

    • Volunteer income-tax-assistance web sites

    • Paid tax preparers

Lesson 21.9 Filing Electronically

During the 2011 tax-filing

season, the IRS received

more than 143 million

individual income tax

returns. Of those 143

million, 39,957,992 tax

returns were filed elec-

tronically.