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Personal Finance
Tax tips from the IRS

Michael Alarcon -- You sweat over the instructions, hope to God you're filling out the forms correctly, and then top the day off with a late-night dash to the post office. Yes, it's Tax Day, that annual spring ritual. And most of us consider it both a civic responsibility and a pain in the neck.

Nothing will ever make us love doing our taxes. But the Internal Revenue Service does make it possible to file our returns more quickly and easily. Just as you may have become accustomed to ordering U2 tickets or a new Gap sweater via your computer or telephone, you can use those same channels to file your tax return.

Electronic Filing

To do your taxes from a home computer, you need online access and some piece of tax-prep software that has electronic-filing, or e-filing, capability. Many Web sites now offer downloadable software that you can use: preptax.com, wintax.com, TurboTax.com, taxsoft.com, and others cost about $15 on average. Most of these Web sites even offer free trials just to see if you like what they have to offer.

After completing your return, you'll send it into an IRS electronic return transmitter, which then puts it into a special format and passes it on to the appropriate IRS department. You may also have to pay an extra e-file fee (usually around $10) to the transmitter. However, some software providers e-file for you at no extra charge. You can even simultaneously e-file both your federal and state returns in some states.

If you hire a professional to prepare your tax forms, he or she may be able to e-file your returns with the IRS for you. Almost all of the national chain tax preparers now offer this service.

Other e-file options include the IRS Volunteer Income Tax Assistance sites and the Tax Counseling for the Elderly programs. Some employers offer e-file services for their employees. You might also want to check out a few sites that aren't officially affiliated with the IRS. These sites tend to offer a wealth of tax tips and hints.

Of course, whichever route you choose, you must use a preparer, transmitter, or other company that's been IRS-approved. Look for the "authorized IRS e-file provider" symbol, or check out the IRS Web site (www.irs.gov") for a list of participating companies. Within 48 hours of transmission, the IRS acknowledges acceptance of your return. Any error notices or question letters won't be sent for a number of weeks afterward. Because electronic tax returns are computer-verified before being sent, they contain fewer errors--less than one percent, compared with about 20 percent for paper returns. Your chances of being audited are significantly decreased.

TeleFiling

If you're one of the millions of taxpayers who receive a special TeleFile package in the mail, you can file your taxes via a touch-tone phone. It's a free system, available 24 hours a day, seven days a week. But only those who received these special packages, and whose name and address information is correct, can use TeleFile. You can't order the package from the IRS or use someone else's booklet.

Here's how TeleFile works: Before you dial the toll-free number, gather your W-2 forms and all other information necessary for completing lines A through G of the TeleFile Tax form. You will be asked to enter the information by touchtone phone. The system does all the math -- including figuring your earned-income credit, if applicable, and computing your balance due or refund. You'll get a confirmation number before you hang up as proof of filing.

What About the Money?

Your refund will also be sent back much quicker if you file by phone or computer. It should be processed within three weeks--or even sooner, if you allow the IRS to directly deposit it into your bank account.

If you owe money, you might use e-file to hold off paying your taxes until the last minute. You can pay by check or money order, or even your credit card (MasterCard, American Express, Discover), by dialing 1-888-2PAY-TAX. You'll pay a fee to use that plastic, though--up to 2.5 percent of your total tax due.

With so many ways to file, and with the notoriously nit-picky IRS easing up, tax time is now easier to handle. Of course, no matter how good the new income tax software gets, it's never going to be as foolproof as surrendering your paperwork over to a professional. The last thing you need is for your wages to be garnished until you're 40 because you're too proud (or negligent) to go to a convenient tax preparer like H&R Block. In the long run, these services may be well worth the $50 to $100.

Michael Alarcon is a freelance writer, based in California, whose work has been featured by SYNGE.com and other sites.

© 2003 CareerBuilder.com

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