Having an EFIN can make tax filing extremely easy on behalf of businesses that operate in the USA. This can be an essential facility that allows them to continue generating revenue and accomplish organizational goals. However, there are still a lot of questions many small business owners have.
The confusion surrounding EFIN can cause problems in the long run for SMEs. This article will let you know all about what an EFIN is and how to get an EFIN. Throughout this article, we will go over the following questions so you can start on the right path.
EFIN stands for Electronic Filing Identification Number. It is a 6-digit number that allows you to electronically file tax returns, making the entire process easier, streamlined, and simpler. In addition, an EFIN helps to identify firms that pass a suitability check and have completed the IRS e-file application.
If you are curious about how to get an EFIN, then you'll be glad to know that the process is quite smooth. The number is issued to companies and individuals who are approved as authorized IRS e-File providers.
After that, you need to complete their appropriate e-File applications. The IRS will then send an acceptance letter, complete with the EFIN included. After that, you can use this EFIN to file and prepare your taxes comfortably.
Instead of the number being assigned to an individual, the entire firm owns the EFIN. It is considered to be key to providing better service to your clients while complying with the federal and legal demands for electronic tax filing. Getting an EFIN can allow you to act as a fiduciary on behalf of your clients.
No, not everyone can obtain an Electronic Filing Identification Number (EFIN). EFINs are issued by the Internal Revenue Service (IRS) to tax professionals who are authorized to e-file tax returns for their clients. To qualify for an EFIN, tax professionals must meet certain requirements set by the IRS.
To apply for an EFIN, tax professionals must complete the IRS e-file Application process, which includes
Additionally, tax professionals must have a valid Electronic Signature Agreement on file with the IRS, have a computer system that meets IRS e-file requirements, and have completed an IRS-sponsored training course on e-filing.
EFINs are not issued to individuals who are not tax professionals or who do not meet IRS requirements for e-filing. For example, individuals who only prepare their own tax returns do not need an EFIN and, therefore, cannot obtain one.
Additionally, individuals who are not authorized to prepare and file tax returns for others, such as those who do not have a valid PTIN, cannot obtain an EFIN.
Furthermore, the IRS may deny or revoke an EFIN if a tax professional engages in unethical or illegal practices, fails to comply with IRS rules and regulations related to e-filing, or if their computer system fails to meet the IRS e-file requirements.
However, the eligibility criteria also have other caveats. The eligible principal or responsible official must be a citizen of the United States or a foreigner with permanent resident status. Furthermore, they have to be over 18 years of age at the time of application. Lastly, they must meet the state and local bonding requirements for maintaining tax returns.
In short, no. While it was possible to prepare taxes without EFIN, recent policies have changed how things work. All tax preparation businesses and consultancies need to have an EFIN as per the IRS requirements. In addition, any business that files over 10 tax returns have to use the dedicated e-File services. As such, e-filing is now a mandatory process for businesses.
If you are not a tax professional, you do not need an Electronic Filing Identification Number (EFIN) to prepare your own tax return. You can prepare your tax return manually by filling out the necessary forms and mailing them to the IRS. You can also use tax preparation software to prepare your return electronically without needing an EFIN. The IRS also provides a Free File program that allows eligible taxpayers to prepare and file their federal tax returns for free without needing an EFIN.
However, suppose you are a tax professional who prepares tax returns for clients. In that case, you are required to have an EFIN to file those returns with the IRS electronically. If you do not have an EFIN, you cannot e-file tax returns on behalf of your clients. Instead, you will need to prepare the returns manually and have your clients sign and mail them to the IRS.
It is important to note that even if you are not required to have an EFIN to prepare your own tax return, you may still need to obtain a Preparer Tax Identification Number (PTIN) if you are paid to prepare tax returns for others.
A PTIN is a unique number issued by the IRS to tax professionals who are authorized to prepare federal tax returns. If you are a paid tax preparer, you must have a valid PTIN in order to prepare tax returns for others.
If you were wondering whether or not your EFIN will expire, then you can rest easy. Many entrepreneurs and tax preparers who want to know how to get an EFIN often get confused about the expiration time. However, once it is issued, the number does not expire, and you don't have to renew it.
However, be warned. If your company does not file tax returns through electronic means for two consecutive years, the IRS will send you a notification about its removal from the list of active e-file providers.
Once this notification is sent, you have about two months (60 days) to respond. After that, you can reactivate your EFIN by just replying to the notification and following the instructions. However, if you fail to respond in time, you will need to submit a new application and start all over again.
Suspensions and cancellations, while uncommon, are still possible. Suppose your company suspends you as an e-file provider. In that case, you can apply for reactivation of your EFIN after the suspension. In case of expulsion, you will no longer be allowed to apply again.
Individual taxpayers who file their returns electronically can do so without an EFIN. Instead, they can use commercially available tax preparation software or online platforms to prepare and file their tax returns electronically. These software or platforms are designed to meet IRS standards. They can submit tax returns to the IRS electronically without an EFIN.
There is no limit to the number of electronic tax returns an individual taxpayer can file without an EFIN. However, the IRS limits the number of returns that can be filed electronically from an unlicensed tax preparer5. This is done to prevent fraud and abuse.
If taxpayers file more than 5 returns electronically, they must obtain an EFIN. To obtain an EFIN, the taxpayer must apply to the IRS and meet certain requirements. This is done to ensure proper accountability with among the tax preparers.
The IRS requires tax professionals to meet specific qualifications to obtain an EFIN, including passing a suitability check, complying with the IRS e-file requirements, and submitting fingerprints for a background check.
Ultimately, individual taxpayers who file their returns electronically can do so without an EFIN. In addition, there is no limit to the number of electronic tax returns an individual taxpayer can file without an EFIN.
However, the IRS limits the number of returns that can be filed electronically from a single computer or IP address to 5. If a taxpayer needs to file more than 5 returns electronically, they must obtain an EFIN by meeting specific qualifications and submitting an application to the IRS.
Doing taxes on your own can be tedious. E-filing is mostly done through software and applications. They provide greater convenience, user interface, and increased security for many tax preparers. They save time and help companies meet the needs of their clientele much more effectively.
Currently, there are hundreds of tax preparation software being used. However, one of the most widely used tax filing software includes the following:
Quickbooks offers an all-in-one umbrella solution for tracking expenses, running reports, and customizing invoices. In addition, they attempt to offer customized support for different types of users so as to meet their needs better. As such, they have different packages, each suited to a different type of customer.
The three packages offered are for starting businesses, running businesses, and expanding businesses. All of these include the basic functions of tracking income and expenses, tracking GST and VAT, integration with banking software, progress invoicing, reporting and insights, and much more.
However, for running and expanding businesses, there are premium features. These include managing bills and payments, multi-currency utility, inventory tracking, budget management, and project profitability.
The core idea behind Quickbooks's success and rapid adoption is its commitment to convenience. The software also has mobile applications, allowing for managing accounts and taxes on the go. This is perhaps why almost 3.4 million small businesses are using it.
With loads of options to choose from, each customizable, Quickbooks is the go-to application for many businesses and individuals. Additional cloud storage and accountant access also help to build closer and stronger relationships. In addition, by cutting down the time from hours to minutes, Quickbooks is helping SMEs save time and bolster convenience.
TaxSlayer Pro is another well-established software that is designed for preparing taxes efficiently. In addition, it provides a plethora of resources and utilities that make this quite a useful app for unlimited tax filing.
The app provides guidance on preparing taxes and properly filing them, making this one good for beginners. The app allows multiple devices to be used simultaneously to prepare individual tax returns. In addition, there are different price plans for different taxes, such as state, local, and federal.
TaxSlayer offers convenience and attractive price plans. They greatly boost individual tax preparers who need to file taxes for dozens of clients at once. The user interface is helpful, and the guidance provided can be useful if you run into any problems or irregularities.
Due to its guaranteed refund policy, online support, and special guides available, TaxSlayer was rated #1 on Trustpilot. The app guarantees 100% accuracy and is a brilliant investment for tax preparers, new and old alike.
Due to its affordability and inclusive product lines, many service providers have even taken to use it as freelancers. However, the app does not support certain business returns. Thus, despite being affordable, accurate, and comprehensive, it may not be suited for every project.
Bonsai Tax provides a tax and financial management software that is designed for accuracy, speed, and convenience. It is built exclusively for self-employed tax preparers to track expenses, estimate quarterly taxes, and maximize tax write-offs.
The app can integrate into your bank or credit/debit card and automatically generate tax receipts for increased convenience and speed. With Bonsai Tax, you easily have your transactions scanned for any potential tax write-offs. Then, with a few clicks, you can have the results you need with little hassle.
Bonsai Tax promises to help you save an average of $5,600 per year and help you avoid surprise bills during tax time. This is a godsend for self-employed tax preparers and tax firms. The ability to enjoy tax write-offs and save thousands of dollars per year is a huge benefit.
Since Bonsai automatically identifies the expenses that are deductible, it helps to save you some extra money during tax time. The app also allows for better calculation and tracking of expenses so you can rest assured about any surprise tax bills.
Perhaps the best thing about Bonsai is that it is part of a larger financial assistance software suite. As a result, Bonsai Tax can be used alongside Bonsai CRM, accounting, banking, invoicing, and handle all financial matters. This means that for greater benefit, a financial service provider can leverage their effectiveness with the entire Bonsai service line with convenience.
H&R Block is a tax preparation software that allows individuals to prepare and file their taxes online. It offers various features to help taxpayers maximize their refund and ensure that they pay the correct amount of taxes. In addition, the software has a user-friendly interface that guides taxpayers through the filing process step-by-step.
H&R Block also offers a feature called "Worry-Free Audit Support," which provides assistance in the event of an audit by the IRS. In addition, the software can import tax information from other sources, such as W-2s and 1099s. It can also import data from previous years' tax returns.
H&R Block offers free federal tax filing for simple tax returns and charges a fee for more complex returns.
Jackson Hewitt is another tax preparation software that allows individuals to file their taxes online. The software offers a user-friendly interface that guides taxpayers through the filing process. It also offers various features to help taxpayers maximize their refund and ensure that they pay the correct amount of taxes.
Jackson Hewitt offers a "Maximum Refund Guarantee," which promises to get taxpayers the maximum refund they are entitled to. In addition, the software can import tax information from other sources, such as W-2s and 1099s. It can also import data from previous years' tax returns.
Jackson Hewitt offers free federal tax filing for simple tax returns and charges a fee for more complex returns. It also offers a feature called "Audit Defense," which provides assistance in the event of an audit by the IRS.
Ultimately, the question of how to get an EFIN is simple, but some complications are involved. For instance, the process of obtaining an EFIN requires proper eligibility. The IRS issues Electronic Filing Identification Numbers (EFIN). They are designed to make electronic tax filing easier, simpler, and smoother. With the increasing number of tax preparers filing taxes online, e-filing has become a necessary progress in the business.
There are many benefits to having an EFIN for your firm. For instance, you can enjoy unlimited tax returns, benefit from cost-saving and time-saving measures, and keep your information safe. In addition, since EFIN doesn't expire, it means you can use it for longer periods of time and benefit for the long term.
Due to the proliferation of online and electronic software, many companies have cropped up with promising accurate results. Many software such as Quickbooks, TaxSlayer, H&R Block, and Jackson Hewitt have appeared, satisfying a particular niche. All of these offer ease in filing and tax preparation while fetching an affordable price.
Bonsai is also a competitor in the field, providing an umbrella of financial utilities designed to help out self-employed tax preparers or financial firms. From accounting software to invoicing assistance, Bonsai's tax preparation software makes filing taxes much easier and more convenient. Not only that, but it helps save money as well. So if you want to know how to get an EFIN, then you should definitely consult Bonsai.
Bonsai is a full-stack suite of business tools, including CRM, scheduling, and invoicing for accountants, coaches, consultants, and others! Start your free trial today