IRS again expects to see more e-filing
By Tim Pennington
Cincinnati Enquirer
Almost two decades ago, the practice of filing federal tax returns via computer was born. This year, the number of people going online to file is rising, and the service is quickly becoming more affordable, with more than half the country able to file for free.
As taxpayers begin organizing receipts and W-2s to send to the Internal Revenue Service before the April 15 deadline, the IRS expects to see a continual climb in the number of electronic filings, or e-files.
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In 2003, 11.9 million of 130 million taxpayers e-filed their returns from home, 27 percent more than the year before. Authorized providers, such as professional preparers and accountants, filed 37 million returns in 2003, up 11 percent from the previous year.
Last year, more than 4 million people used TeleFile telephone system instead of filling out Form 1040EZ.
"We've seen double-digit increases every year since we really started encouraging electronic filing in 1999," said Nancy Mathis at IRS headquarters in Washington. "It's a simple process, and individuals get their refund check back in half the time it would take if it was filed by paper."
Commercial software products such as TurboTax and TaxCut are the big reason most consumers have switched to filing taxes from their home computers. The software has become easier to use and actually looks for ways for individuals to save on their taxes by conducting "self audits" and suggesting certain deductions.
Congress ordered the IRS to take steps to have at least 80 percent of all tax returns filed electronically by 2007.
The IRS just announced that all taxpayers can file electronically for free through its Web site.
Intuit's TurboTax owns 71 percent of the consumer market and retails for $19.95 for its basic model, with a $14.95 fee to file the return electronically with the IRS (unless you file a TurboTax prepared return through the IRS Web site). It also offers TurboTax Deluxe ($39.95 plus $10 rebate and a free filing) for individuals with more complex returns, and TurboTax Premier for extra help with investments, business issues and rental property for about $80.
TaxCut, which is owned by H&R Block, offers a Standard edition for $14.95, which includes a $5 mail-in rebate. TaxCut Deluxe ($24.95 plus $5 mail-in rebate) gives access to H&R Block's video library and instant access to IRS publications. TaxCut Complete Home and Business ($69.95 plus $10 mail-in rebate) is for the self-employed and those with a home office and businesses that need to file various IRS forms.
Trailing a distant third in popularity is TaxACT, which offers a standard edition that does not offer advice or review. But it's a free product if you print and mail your return — or if you file through the IRS site — and $7.95 for electronic filing.
