The days of settling with an adding machine and a pot of strong coffee for income tax preparation has gone the way of the nickel Coke.
More and more Americans are using personal computers and, in some cases, free software to file their federal tax returns.
By the end of the month, taxpayers should receive their annual W-2, 1099 and other tax forms needed for filing. The Internal Revenue Service expects the current economic downturn to make electronic filing, or e-file, a more popular option.
"These are tough times, and e-file is the best way for people to get cash in their pocket quickly," IRS Commissioner Doug Shulman said. "Filing electronically with direct deposit can get refunds to taxpayers in as few as 10 days. Combined with important changes in the Free File program, we believe e-file is a better option than ever before for the nation's taxpayers."
Last year's average refund was $2,429. The IRS realizes people need their refunds quickly in tough times. Shulman urges people who haven't e-filed before to consider that option this year.
IRS e-file totaled nearly 90 million tax returns in 2008. Almost 58 percent of all returns were filed electronically. Last year, there was a surge in e-file from home computers. Nearly 27 million people prepared their own e-file returns, an increase of more than 19 percent from the previous year.
But Chris Hardy of Paramount Tax and Accounting in Gainesville believes there remains a strong market for taxpayers who will seek the services of a professional.
"This is a unique year because there are so many tax law changes that took effect late in the year," Hardy said. "A professional can make sure that everything is updated when you file."
An example, he said are changes in allowances for business mileage, which went up at midyear and then back down later in the year.
"Taxes are the biggest expense you'll pay during the course of your lifetime," Hardy said. "Why do you entrust that to doing it yourself when you can utilize a professional who will make certain you're getting every possible deduction."
But using a professional can cost $75 for a basic return, more for complicated returns.
The IRS points out that most taxpayers qualify for free tax preparation offered through Free File on IRS.gov. Regardless of income level, taxpayers who are comfortable with filling out paper tax forms and who don't need extra assistance can use the IRS's Free File fillable Forms. These new online versions of paper tax forms that can be e-filed are available for the first time by visiting the IRS.gov Free File Web site.
Taxpayers who e-file and who choose direct deposit can receive their refund in as few as 10 days. IRS e-file allows taxpayers to file their returns now and pay later if they owe taxes. It allows taxpayers to file both federal and most state returns at the same time.
The IRS does not charge taxpayers to e-file their completed returns, but some tax preparers and software manufactures may charge a fee. However, this year a number of large software companies are waiving this additional fee.