Magazine article State Legislatures

Filing State Income Tax Return Has Never Been Easier

Magazine article State Legislatures

Filing State Income Tax Return Has Never Been Easier

Article excerpt

State departments of revenue now offer taxpayers the opportunity to electronically file (e-file) their income tax returns by using a tax professional service, a personal computer with Internet access or by simply using a telephone. Every state that levies a personal income tax, except Hawaii, allows e-filing of state income tax returns.

Electronic filing of state tax returns accounted for 17 percent of total returns filed in 1999, according to the Federation of Tax Administrators. Estimates are that the total will grow to more than 22 percent in 2000.

Taxpayers can use professional tax preparers to e-file their returns with the IRS and their state department of revenue. Tax preparers use software to complete federal and state returns and transmit them electronically. Tax preparers most often charge a fee for e-filing. Refunds to taxpayers can be electronically deposited into bank accounts, and e-filing also allows for electronic withdrawals from taxpayers' bank accounts.

Eleven states also allow individual taxpayers to e-file for free using a department of revenue Web site. These states provide the taxpayer a return that can be filled out online or, in some cases, can be downloaded with state-supplied software and transmitted via the Internet later. Another option is for taxpayers to use an approved Web site that charges a fee for preparing and filing returns. In most cases, the taxpayer needs to complete the federal and state return at the same time.

Taxpayers also have the opportunity in 28 states to file their state income tax returns using a telefile system that requires only access to a touch-tone telephone. Individuals enter all of their tax return information by using a telephone keypad. The telefile systems also do the math on the return to ensure that the computations are error-free.

Regardless of the type of the electronic filing system, all are intended to speed up the process of receiving a tax refund from the state. …

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