What Is TXF?

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DEFINITION

"TXF stands for "tax exchange format," a file extension for data files that contain tax-related information. Most income tax preparation software will import this type of file, as do accounting software, spreadsheet programs, and accounting programs.

Definition and Example of TXF

The TXF file extension allows for the sharing of data within a software or spreadsheet program. Many tax preparation software and accounting programs will import TXF files. TXF files have the .txf file name extension and are intended for import by tax preparation software.

Exporting TXF data from your financial software and then importing it into your tax software saves time that you would otherwise have to spend entering data into the tax software to prepare your income tax return. The TXF file extension has also been used for compressed archive files, which combine multiple files into one that can be compressed.

  • Alternate name: Tax exchange format

One example of TXF includes software that reduces or eliminates redundant tasks. Companies use accounting software in which the client information can be transferred to other areas of the business. Customers' address information could be shared and used for providing a quote, a work order, invoicing, and generating a receipt once the bill has been paid.

The TXF data files make it possible for a software program to share and recognize the data, saving time and money, as well as improving the efficiency of the business.

How to Open TXF Files

Windows operating system software is designed to recognize and adapt to the three-letter extension following a file name. It will automatically use the properly installed program to open the file. Windows will typically prompt you to download a program that will recognize the extension if it can't identify one that's already installed.

Do a search in your software "help" documentation if you don't use Windows or if, for some reason, Windows doesn't prompt you to download a workable file.

Most Windows personal finance software programs export TXF data, as do some Mac personal finance software programs. You can usually click on "File" and then on "Export" to export tax information to create a TXF data file from your financial software.

Another, far simpler option is to double-click on the file and let the associated program take it from there.

It's essential that you properly categorize tax-related expenses throughout the year if you're going to use your personal finance software to create a TXF file.

Types of Tax Software

TXF is an accepted standard for saving tax data in Quicken, Intuit QuickBooks, and others. Virtually all reputable tax software, including Turbo Tax from Intuit, will generate and accept files with this file name extension.

In addition to the popular paid tax software options, there are plenty of free tax software options.

Free tax software is typically only an option offered to new customers, those with low incomes, or uncomplicated tax situations. However, you may need to pay for the software if you used a free version last year and want to use the same program this year, or you can choose another free tax program to use this year to avoid charges. If your tax situation has grown more complicated, or your income has markedly increased, a paid software may be the only option.

Tips for Choosing Accounting Software

Small business owners use accounting software to keep tabs on their sales, revenue, and costs, saving hours compared to handling the books manually. TXF is the accepted standard for many accounting software programs, which is usually more efficient than using a spreadsheet. Accounting software also reduces or eliminates redundant data entry, like entering the customer's information that can be readily transferred between programs that recognize the TXF file extension.

You might not need accounting software if you're a sole proprietor with no employees, low or no inventory, and just a handful of customers. Otherwise, there are always free or low-priced accounting software options available.

Small business owners who carry inventory or have more customers or employees will save time and produce more accurate records by using accounting software.

Narrow down your accounting software choices by making a list of the small business accounting features needed to run your business. Most small business accounting software features include:

  • Inventory management
  • Sales tracking
  • Management of customer contacts that works with your current contact management software
  • Merchant account support to accept credit card payments
  • Budgeting
  • Estimates
  • Payroll
  • Business tax reporting

Key Takeaways

  • TXF is a file extension that appears as .txf after a file name, which tells a computer what kind of file it’s accepting and the program to use to open it.
  • The .txf file extension is the accepted extension for most reputable tax preparation software.
  • Accounting software also recognizes TXF extensions.
  • You might need accounting software and tax preparation software if you’re running a small business. 

Article Sources

  1. File.org. "Opening TXF Files."

  2. Lehigh University. "Common File Extensions."