A growing number of tax payers are using home computers and electronic filing to speed income tax return filing -- and refunds -- thanks to both software and hardware that takes more and more of the guesswork out of filing.
Tax professionals continue to work up the bulk of individual tax returns, because completing tax returns, especially complicated tax returns, such as those with home ownership-related tax issues, is often beyond the skill sets of most taxpayers.
Tax return software and electronic filing or Internal Revenue Service-sanctioned "e-filing" systems can't transform you into a CPA anymore than computer assisted design (CAD) software can make you an architect, but for simpler returns the technology can save you money, speed your refund and, well, make is easier to pay any taxes due.
By the week ending March 17, 2006, more than 13 million returns filed for the 2005 tax year were filed electronically by taxpayers using computers in the comfort of their own home. Last year 11.3 million taxpayers e-filed from home during the same period.
"People using tax preparation software is driving the increase in e-filing," said IRS commissioner Mark W. Everson.
"Taxpayers can rely on e-file as a safe, accurate way to quickly finish their taxes and get a refund," he added.
Still, among the total of nearly 47 million e-filed tax returns for the 2005 tax year, tax professionals logged more than 33.6 million of them.
When all returns were considered (both e-filed and otherwise filed) 67 million returns were filed by March 17, with e-filed tax returns, 46.8 million of them, comprising the bulk, 70 percent.
The big draw for e-filing is speedy refunds, which typically arrive within three weeks after the IRS receives your return. Hard copy tax return filing by mail means a refund wait that's twice as long -- six weeks, the IRS says.
The average refund this year is $2,379, up from $2,289 last year.
Conversely, if you owe taxes and don't pay them when you file, you'll likely also be dunned sooner for both taxes due, interest and any penalties the government charges you for your shortcoming.
But why put off the inevitable only to pay more for the delay?
Technology also allows the IRS to direct deposit your refund (via both e-filed or hard copied returns) in personal finance accounts, further reducing time it takes to mail a check and schlep it to the bank for deposit or cashing.
As of March 17, the IRS direct deposited 40 million refunds, 70 percent of all refunds issued this year, up from 67 percent last year.
There are several ways to cash in on e-filing benefits.
Do-it-yourself
Last year more than 17 million tax payers equipped with a personal computer, electronic filing tax software, a modem or Internet access and nerves of steel, but not necessarily all the tax savvy they should have had, filed from home.
The IRS provides a list of IRS tested and approved software and 37 states and the District of Columbia allow individuals to e-file state tax returns.
Hire a pro
Advise your tax preparer to e-file. While you can file your own taxes at no charge, provided your are competent, tax preparers (CPAs, enrolled agents, accountants, tax preparation firms, etc.) perform their services for a fee. Find a tax preparer through friends, family, co-workers and others you trust who've recently been satisfied with tax preparation work or use the IRS' e-file preparer locator.
File for free
The IRS offers "Free File" services for those who qualify with an adjusted gross income of $50,000 or less. Commercial tax software companies provide these online Free File services via links through the IRS' website, which includes reduced cost e-filing services as well.
