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Filing from home is easier than ever

Gone are the days when tax time meant tiny-print forms spread out on the dining room table for days, followed by months of watching the mail for that distinctively bland government refund check.

Thanks to home computers, tax preparation and electronic filing have never been easier, and refunds come quickly.

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The Internal Revenue Service began a big push for electronic filing several years ago and has finally muscled a majority of taxpayers in that direction. For 2005, the IRS says 68.5 million individual returns — more than half — were filed electronically, 11.3 percent more than in the previous year.

Many were e-filed by tax professionals, but about 17 million came directly from home computers.

"Doing taxes by hand manually is like churning your own butter," said Julie Miller, a spokeswoman for Intuit, maker of TurboTax, a tax program.

Tax software is a hot market. Intuit says TurboTax accounted for more than $570 million of the company's $2 billion in revenues in its 2005 fiscal year and is driving the company's growth. Intuit's chief competitor, H&R Block's TaxCut, doesn't release sales figures but says its business is also booming.

Both TaxCut and TurboTax are fairly robust platforms, able to handle more complex tax situations like rental incomes, capital gains and small businesses.

"They get better every year," said Claude Renshaw, accounting professor at Saint Mary's College in Notre Dame, Ind. "They're very user-friendly."

They're also fairly inexpensive. Either program can be had, on average, for between $30 and $40 — depending on whether features like state, business and estimated taxes are included — and less for a simple return or one done online.

That compares with an average of about $150 for a tax return prepared at one of H&R Block's 12,000 offices.

Tax prep expenses, including books and software, are deductible for the year in which the purchases were made, so save those bills and product receipts.

As part of its push to e-filing, the IRS has a "Free File" program that allows taxpayers with adjusted gross incomes of $50,000 or less to prepare and e-file taxes for free through participating online preparers. To get the free service, taxpayers must access a vendor through the IRS Web site at www.irs.gov.

The IRS says e-filing speeds refunds, reduces tax errors and saves the agency money. The agency approves the software used for tax prep and e-filing and says the process is secure and private.

Federal rules prohibit participating companies from using tax return data for unauthorized purposes.

Both programs can import tax data from last year's return, certain accounting programs and some employers. They eliminate most math errors — the program does the computation — and check for other problems that can cause tax errors or flag a return for auditing. They also offer tax advice.