The first step to electronically filing a federal individual tax return is to mark the return for e-file. This is done within the return and involves several steps:
- For a return that results in a refund, indicating how the refund will be disbursed, i.e., whether the taxpayer will receive the refund directly from the IRS or if it will be facilitated with a bank product along with the means of disbursement.
- For a return that results in a balance due, including the direct debit info if desired.
- Completion of Form 8879, IRS e-file Signature Authorization, including signature PINs for the taxpayer, spouse, and ERO.
- If needed, indicate the return is self-prepared.
- If needed, indicate on Form 8453 certain uncommon attachments are included in the return.
- If desired, set up estimated payments to be withdrawn by direct debit.
Additionally, if a bank product is being used there are additional steps that involve entering the information the bank requires on its application as well as indicating whether any portion of the refund is desired in advance.
Two important points about state return e-file:
- Marking the federal return for e-file doesn't automatically mark the state return for e-file. If a state return has been prepared, it will also need to be explicitly marked for e-file and the refund disbursement method or balance due payment method will need to be indicated, as appropriate.
- Some state returns include a separate municipal and/or school district return. Not all of these returns are e-fileable, but if such a return has been prepared along with the state return and is e-fileable, it likewise needs to be explicitly marked for e-file.
1. To mark a return for electronic filing, from the Main Menu of the Tax Return (Form 1040) select Mark Return Electronic.
2. If you're offering bank products and return results in a refund, you'll be asked, "Does the taxpayer want the tax preparation fees taken out of their refund?" If the taxpayer wants to utilize a bank product, answer YES and select the option they would like, both for the method (check, direct deposit, debit card, Walmart Moneycard, etc.) and whether or not an advance is desired.
If you're not offering bank products, or if the taxpayer declines to use one, answer NO and select one of the two non-bank product options, either direct deposit or mailed check.
Whether or not a bank product is chosen, if the taxpayer chooses direct deposit you will be prompted to enter their bank routing and account numbers, as well as indicate whether it is a checking or savings account. Tip: To avoid delays, ensure the routing number the taxpayer provides is the number on their check rather than on a deposit slip. Banks often use an internal routing number on deposit slips that won't work for an external deposit.
Depending on the bank, upon selecting the bank product option a disclosure document might immediately print to PDF. You'll want to print this to paper for the taxpayer as it contains important information about the services the bank is providing.
3. In the Practitioner Pin Menu, ensure all PINs are entered. Upon exiting this menu you'll be asked if you'd like to print Form 8879. Answer YES unless you usually print it elsewhere.
For returns that include a bank product, there are two additional steps after exiting this menu:
- Depending on the bank you may be prompted for additional information, such as a cell phone number and opting in to receiving text messages.
- You will be prompted to print a Consent to Disclosure form. This form is similar to the Consent to Use form and must be signed by the taxpayer(s).
4. In the E-File Menu, if you're offering bank products be sure to visit these two menus and complete all the required information related to the bank application:
- Residential Address / Phone Numbers / Email
- Bank Application Information
5. Also under the E-File Menu, select Other E-File Information if any of the following information needs changing:
- EFIN - If the return will be filed under a different EFIN than has been set up in the ERO Configuration Menu, select the alternate EFIN here.
- ISP EFIN/CBIN - If you are an Intermediate Service Provider (ISP), enter the EFIN number here.
- Prepared By - If the taxpayer has self-prepared their own return and only wants you to e-file the return, then select this line to toggle from Preparer to Self.
- Preparer also ERO - If the tax preparer is not the ERO, select this line to toggle Yes to No.
- Paid Preparer Info - If the previous menu line is set to No, select this line and enter or verify the information needed.
- Mark Form 8453 Attachments - Form 8453 is produced automatically as needed in most cases, however there are four uncommon forms that you may need to indicate are being mailed to the IRS along with Form 8453. Select this menu to indicate those forms, if needed. Included in this menu is an estimates calculator that can be used to estimate how much will need to be withheld based on the taxpayer's estimates of the following year's tax return numbers.
6. If the taxpayer would like send with the e-filed tax return a request for estimated payments for the following tax year to be automatically debited from their bank account by the IRS, select this line and enter the amount for each quarter, the bank account information, and indicate that they would like to schedule these payments. (This menu is here for your convenience, a shortcut back to the same menu line under the Payments, Estimates & EIC menu in the return.) Payment coupons can also be printed by selecting the View icon in the toolbar at the top of the window.
- Remember that the signed Form 8879 is not sent to the IRS but must be kept on file for three years.
- Make sure you get the RTN from a check and not a deposit slip. Some banks use an internal routing number on their deposit slips rather than their RTN. Your client's refund will be delayed for several weeks if the proper RTN is not transmitted to the IRS.