The speed of the internet, online tax preparation services, tax preparation software, and the electronic transmission of tax filings and refunds, has revolutionized tax preparation.
The use of electronic filing services shortens the time that it takes the Internal Revenue Service (IRS) to receive and process most tax returns and to deposit refunds electronically to the tax payer's bank account.
To file tax returns electronically, an authorized service that has joined with the IRS to form the Free File Alliance must be used.
The taxpayer has to authorized a designated bank to receive the refund. On the electronic portion of the the tax return, the tax payer provides the savings or checking account numbers and the routing number of the bank that he wants his refund deposited in.
It is up to the taxpayer to make sure that the correct information is on the electronic return to insure that his refund money is deposited in the right bank account.
Filing electronically may or may not be worth the fee that is charged just to get a faster return. The taxpayer should keep in mind that if he or she files by mail, his or her refund can still be deposited directly into his account by instructing the IRS to do just that.
If you owe taxes on your return, you can still file electronically and pay by credit card or by direct debit from your checking or savings account.
Some electronic filing services offer refund anticipation loans to taxpayers who may want to receive their refunds sooner than the normal time it takes to get them back.
Refund anticipation loans are offered by lending institutions that are not affiliated with the IRS and are transacted solely between the taxpayer and the electronic filing service or tax consultant that the taxpayer uses.