Electronic Filing e-file by authorized IRS e-file providers s a system for submitting tax documents to the IRS through the Internet or direct connection.

Electronic Filing e-file is a system for submitting tax documents to the US Internal Revenue Service through the Internet or direct connection, usually without the need to submit any paper documents. Tax preparation software with e-filing capabilities includes stand-alone programs or websites. Tax professionals use tax preparation software from major software vendors for commercial use.

Of the 139.3 million US returns filed in 2007, 79.98 million (or about 57.4 percent) were filed Electronic Filing e-file. In 2010, a total of 129.3 million US returns were filed, and 93.4 million were filed electronically: in three years the percentage of returns filed electronically increased to 72.3 percent of total returns. In 2018, 89% of tax returns were filed electronically.

Taxpayers can Electronic Filing e-file free using the IRS Free File service, either using an authorized IRS e-file provider’s tax software, if eligible, or by using online Free File Fillable Forms from the Free File Alliance. Before 2020, the use of a third party was required for IRS e-file, and it was not possible to e-file directly through the IRS website. In 2020, the IRS made direct electronic filing available through IRS Free File Fillable Forms available to taxpayers with incomes above $69,000; for those with incomes below that amount, the documents must be sent via physical US Mail.

The IRS started Electronic Filing e-file in 1986 to lower operating costs and paper usage. Since then, additional features have been added. In 1987 Electronic Direct Deposit was added as a form of payment. Milestones have been set and broken throughout the years. In 1990 4.2 million returns were reached and in recent years a record of 1 billion 1040s have been E-filed. E-filing originally used the processing system developed in 1969 by the IRS but, since 2003, the IRS has been developing a newly enhanced processing system called CADE.

Types of Electronic Filing e-file providers

The IRS accepts electronic submission of a variety of tax forms through their IRS Authorized e-file Providers. The IRS offers e-filing to most forms ranging from the 1040s to the 2290s to the 990s.

Individual returns

Individuals have the option of both free and paid tax software. Recently a feature from the IRS called Free File allows users to file their tax returns for free. It is also possible to go through an authorized Electronic Filing e-file company that files Form 1040 with a service charge. Free File is free, it’s an easy step by step system for those who make less than $64,000 annually and a more task-heavy form of filing for those who make above $64,000. For those who make more than $64,000 a year, the Free File is not step-by-step but an actual Form 1040 that can be filled out, box by box, electronically.

Business returns

Businesses and self-employed taxpayers can choose from a variety of commercial Electronic Filing e-file services depending on their individual needs. Some of the forms that fall under business returns include Form 2290 (truck tax), Form 1099 (reporting payments to individuals other than employees). IRS has no set pricing for each form, so each filing company sets its price accordingly. IRS has a list of authorized websites that do e-filing for some forms.

The tax-exempt organization returns.

Tax-exempt organizations may file the annual information return IRS Form 990, Form 990-EZ, and Form 990-N with a variety of independent tax software providers. As with the business returns, the IRS does not set prices; each e-filing company sets their own.

Authorized e-filers

IRS e-filer providers must be authorized by the IRS. The IRS provides a list of authorized e-file providers in some forms. The authorized providers must pass the testing every year. The IRS changes the order of the certified provider’s lists daily for fairness.