Use sites for electronic filing

February 14, 2000|By Michael Stroh

While traditional tax preparation programs are still improving, a lot of this year's tax action is taking place -- you guessed it -- online.

The Internal Revenue Service is once again pushing taxpayers to file electronically rather than through the mail. According to the IRS, taxpayers who file electronically have fewer errors and get faster refunds.

Last year, about one-quarter of all taxpayers filed electronically, either through the Internet or by "telefile," the agency's telephone service. By 2007, Congress hopes to boost that ratio to 80 percent.

All the tax software packages reviewed here offer electronic filing. With Block's TaxCut Deluxe and Intuit's TurboTax Deluxe, customers can e-file for free after a mail-in rebate. Microsoft's TaxSaver Federal Deluxe users can use the service free without the rebate gimmick.

Another service starting to catch on among taxpayers is online tax preparation. The reason: cost and convenience.

Intuit pioneered the idea with WebTurboTax (www.webturbotax. com), an online service that works much like Intuit's shrink-wrapped counterpart. (In fact, Intuit says the software that runs the Web site is identical.) Taxpayers simply log on and answer a series of questions about their tax situation. The site does the rest. Federal and state returns each cost $9.95. Filers who make less than $20,000 or who need only the 1040EZ form can file for free.

Returns can be saved so you don't have to do them in one sitting. Intuit says the data are kept strictly confidential.

This year Block Financial Corp. launched an online version of TaxCut (www.hrblock.com). Filers pay $9.95 for federal returns and $4.95 for state forms. Form 1040EZ is free. (If you prefer the Microsoft imprimatur, the software giant also offers the Block service. Visit www.moneycentral.msn.com/tax/ home.asp.)

Other Internet options include Taxes4Less (www.taxes4less.com). This one's a hybrid: You supply the tax data over the Internet while the service supplies human tax preparers to crunch it. But it's hard to see the benefit. These services are far more expensive than preparing your return yourself. And if you really want a human, you're probably better off finding a certified tax preparer who works nearby.

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