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How Do I Use E-File for Federal Business Taxes?

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Question: How Do I Use E-File for Federal Business Taxes?
Answer:

The IRS provides a process for electronically filing federal tax returns. E-file allows you to file your business income tax and employment tax returns electronically. The E-file system includes two ways to pay and two types of e-filing, depending on the type of form being filed. Employment tax forms (Form 941, Form 940, and Form 944) must be filed using the employment tax form e-file program.

Two Parts of E-File: Filing and Paying
The IRS E-File system has two parts: filing forms and paying taxes.

  • If you file electronically, you can pay along with your electronic filing by using electronic funds withdrawal, available with tax preparation software (like TurboTax, TaxAct, or H&R Block AtHome) or through your tax preparer.
  • Paying taxes by phone or Internet using a debit or credit card is also an option, whether you file electronically or not.

E-File Options
You can use E-File in one of two ways:

  • Use a tax preparer, like a CPA or Enrolled Agent, who is authorized by the IRS to e-file tax returns. You can ask your current tax preparer if he or she e-files (most do) or find an IRS-approved provider who can assist you with e-filing.
  • Use one of the tax preparation software services, like TurboTax, TaxACT, or H&R Block AtHome. All include e-filing in their tax software packages.

Payment Options

  • You can pay taxes owed using electronic funds transfer, available through your tax preparer or by using tax preparation software. You will need to provide information about your bank account-routing number and account number. You can't use this option with Form 943 and Form 945.
  • You may also pay by using a credit card or debit card, through a service provider. See the list of IRS-approved E-Pay Service Providers and their fees. This list also includes combined e-file and e-pay providers. Credit card and debit card payments are not accepted for these IRS forms: 720, 990, 1120, 2290, 7004, and 8868.

E-File for Employment Taxes
The IRS has special provisions for filing employment tax returns electronically. These returns are: Form 940, Employer's Federal Unemployment (FUTA) Tax Return; Form 941, Employer's Quarterly Federal Tax Return; and Form 944, Employer's ANNUAL Federal Tax Return. To file and pay employment tax forms electronically, you must use the specific employment tax e-file system, which includes several options. Option one is to become a reporting agent, which is a complicated process. The second option is to use an IRS-approved employment tax e-file provider.

Paying Business Taxes with EFTPS
You can sign up for and use the Electronic Federal Tax Payment System (EFTPS) for paying all business taxes, including employment taxes. You must use EFTPS for all federal employment taxes which were previously filed with Payment Coupon 8109. Read more about which employment taxes to be filed with EFTPS.

E-File W-2s with Social Security
Unrelated to IRS e-file, you can also register with the Social Security Administration's Business Services Online to file year-end tax reports and form, including W-2 and W-3 forms for employees.

For a complete list of IRS forms which may be e-filed, go to the IRS e-file list.

Get more information on common business tax preparation software programs or online services.

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