Americans find that e-filing makes taxes less taxing
NEW YORK (AP) Jenniffer Scheideler filed her income taxes electronically for the first time this year and found it fast and fun.
Confined to a wheelchair with multiple sclerosis, Scheideler, 26, of New Milford, Pa., must depend on others to drive her, so ''I can't just run out to the tax office,'' she said.
''The computer is my main outlet, and doing my 1040 online was so very convenient.''
Scheideler is one of the growing number of taxpayers filing their federal and state returns electronically, a trend encouraged by the Internal Revenue Service because computer-prepared forms have far fewer errors than paper returns and are quicker for the government to process.
Through mid-March, about two-thirds of the returns sent to the IRS were e-filed, either by telephone or computer. The 37.4 million tax returns filed by computer represent a 12 percent increase from last year's 33.3 million, the agency said.
Scheideler used H&R Block's online TaxCut product for her returns. When she had problems, she called the company ''and they walked me through it.'' She said she enjoyed e-filing her tax return so much that she filled out online returns for her neighbors; they got their refunds within two weeks.
A faster refund is one of e-filing's appeals. E-filers who have their refunds directly deposited into their bank accounts can expect them within 10 days, or less than half the time for paper filers, the IRS says.
E-filing works also works for those who owe taxes. They can e-file anytime, then mail in a check, put the amount owed on a credit card or sign up for an automatic transfer from a banking account by the April 15 deadline.
While much of the e-filing is done by professional tax preparers, there's been a 20 percent increase in the number of families filing via their home computers this year, the IRS said.
''With taxes getting more complex, especially after the big legislative changes of 2001 and 2003, more people are going to professionals or using software products like ours,'' said Scott Gulbransen of TurboTax, which was developed by the Mountain View, Calif., software company Intuit Inc. ''It just makes it easier.''
E-filing tax software comes in three forms CDs that can be purchased at retail stores, programs that can be downloaded from the Internet and programs accessed directly online.
Prices vary depending on the sophistication of the product and some require an additional fee for the actual e-filing of federal and state returns.
Intuit's Web-based TurboTax ranges in price from $19.95 for the 1040EZ software to $69.95 for its top of the line home and business edition. State e-filing forms cost $14.95 for the EZ version and $29.95 for the standard 1040.
H&R Block's online TaxCut software ranges in price from $24.95 for its ''standard'' program to $79.95 for a ''signature'' edition that also includes a review by a tax professional.
Startup company 2nd Story Sofware Inc.'s TaxACT has been offering free use of its online software for those who want to prepare and print out a tax return, but it requires a payment of $9.95 from those who want to e-file their federal forms.
Low-income families mainly those with adjusted gross income of $35,000 or less and some other groups, including active-duty military and the elderly, can qualify for some free e-file programs. The IRS has a list of participating companies on its Web site at www.irs.gov.
Mark Ciaramitaro, vice president of e-solutions for H&R Block of Kansas City, Mo., said one of the attractions of e-filing is that the IRS confirms within 48 hours if the return has been accepted. He added that taxpayers can be confident their data is secure because the IRS certifies the e-filing companies, which use encryption to move tax returns to the government.
''E-filing is as secure as online banking or anything else being encrypted over the Internet,'' Ciaramitaro said.
E-filing, of course, isn't for everyone. Tax adviser David J. Silverman, co-author of ''Taxes for Dummies,'' worries that some e-filers will stumble trying to decipher complex tax rules.
''If you got married, bought a house, refinanced a mortgage, exercised stock options or got divorced, you'll find that things get complicated rather quickly,'' Silverman said. Even with help built into the e-filing software, ''they (taxpayers) can make glaring errors.''
He recommends that taxpayers who are unsure about a return consider running it past a tax professional before pushing the button. ''Most tax professionals are happy to do a review,'' Silverman said.
He added: ''There's nothing wrong if you still prefer paper and pencil.''
On the Net:
www.turbotax.com
www.hrblock.com
www.taxact.com