E-Filing, short for electronic filing represents the fastest way to file your tax returns with the various governmental entities. Anytime that you have filed a return in any way other than by mailing it the the traditional way, you more than likely used some form of e-filing.

I write this to give some clarification of the various e-filing options such as: Rapid refund or R.A.L., Direct Deposit, an Electronic Check and a Balance due.

The rapid refund has been the most popular option since the beginning of the electronic filing process began. The technical definition of the rapid refund is the refund anticipation loan or r.a.l. This is a 3- party situation where the preparer, the internal revenue service and a bank work together to produce a situation where the client can receive their refund within 1-2 days time.

It takes 24-48 hours for the internal revenue service to give their approval for the bank to lend you your refund. Once approved the bank will issue your check or make a direct deposit minus the tax preparation and the bank fees. The bank fees are charged based on the size of the federal refund.

This option is ideal for tax clients who want/need their refunds quickly coupled with the fact that they don't have to incur any out-of-pocket expenses. The fees are automatically deducted from the federal refund.

When the rapid refund is the chosen option, all the checks will be received & printed by the income tax preparer in their place of business. You may have to make a schedule trip or have it forwarded to you. You may find that 1-2 day rapid refund direct deposit would be ideal to save a trip.

Bank Fees: When dealing with rapid refunds or refund anticipation loans the bank fees are based on the size of the federal refund. If the refund is between:

$300-$1,000 the bank fee will be $43

$1,001-$1,500 the bank fee will be $69

$1501-$2,000 the bank fee will be $84

$2,001-$3,500 the bank fee will be $111

$3,501-$9,999 the bank fee will be $121(maximum)

Direct Deposits, there are 3 ways to have your refunds directly deposited. You can mail your return in the traditional way, instead of having a check mailed to you. You can have it directly deposited (saving 2 weeks).

You can simply e-file and choose the option to direct deposit, you can have the tax preparation fees automatically deducted so you don't have to endure any out-of-pocket expenses. If you choose this option, you must include a $31 processing fee in addition to the regular tax preparation fees. Conversely, you can choose this very same option but you can pay out-of-pocket and avoid the $31 processing fee.

An Electronic Check, this is e-filing where you choose not to have your refund directly deposited, but choose to have a check printed-out for you. This is the slowest of all of the e-filing options because it takes some extra time to have a paper check processed by all entities. If you have no out-of-pocket expenses, then your preparer will have to wait for authorization to print-out your check. Conversely, if you pay up-front then you will have a check come to the address on your return, directly from the Internal Revenue Service.

A Balance Due, even if you owe money, you can still file electronically. The advantages are to ensure that the return has been received and filed in a timely manner, especially when it comes to the April 15th deadline. However, you must pay up-front or out-of-pocket because there is no federal refund to deduct from.

There has been a lot of trepidation involving electronic filing. These options have grown in popularity and will continue to grow. Despite the naysayers, anything that can make your life easier by saving time, and more importantly the effort to meet the financial obligations of tax preparation is great for all parties involved.

Ty Associates highly recommends e-filing or electronic filing to all who qualify. 90-95% of Americans qualify for at least one of the e-filing options that were mentioned within this webpage.