Washington Gone are the days when tax time meant tiny-print tax 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. Refunds come quickly, and waiting for them can involve little more than occasionally checking the IRS Web site.
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, up 17 percent over the prior year.
Judging by tax software sales, millions more Americans prepared their taxes on home computers or online but did not file electronically for one reason or another. In any case, it's clear that computerized tax preparation has taken hold.
"Doing taxes by hand manually is like churning your own butter," said Julie Miller, a spokeswoman for Intuit, maker of TurboTax, a home-computer 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 Tax Cut, doesn't release sales figures but says its business also is booming.
The popularity of home tax software is a far cry from its early days, when many returns were disqualified from e-filing at the last minute and software often had maddening glitches and a cumbersome interview process.
Both Tax Cut and TurboTax are now 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. Renshaw uses such software for his own taxes and that of clients. "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. Taxpayers with complex finances and tax planning needs typically pay more to use a personal tax preparer, no matter where they go.
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 http://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.
But with the tax code notoriously complex - and tweaked each year by Congress - could taxpayers miss out on tax savings by using home tax software, rather than a tax professional? Perhaps.
"If a person is not completely familiar with tax law, I recommend they talk to a professional," says Renshaw, drawing an analogy to specialized medical needs. "If you have a headache or a cold you can probably treat it yourself, but once you pass a certain point and treatment isn't working, you have to see a doctor."
Still, both Tax Cut and TurboTax update their software with any last-minute changes by Congress and the IRS. The programs themselves can be purchased online as a download or at a retail office supply store in a box with CD-ROM.
Their colorful graphics are easy on the eyes, and each product now offers an enhanced deduction feature that tells users how much to allow as the fair market value for noncash charitable donations like clothing, toys, books and household items.
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.
This year, consumers are less likely to see all those rebate forms tumble out of the software box. Tax Cut still offers an electronic filing rebate, but TurboTax has dropped rebates in favor of a "refund bonus" program. Customers who e-file can, for a one-time fee, use tax refund money to purchase gift cards from dozens of vendors, ranging from Blockbuster to JC Penney. The vendors add a bonus amount to the cards as incentives.
When returns are filed electronically, the IRS sends an e-mail within 48 hours confirming it has been accepted. If the taxpayer provided bank account and routing numbers, a refund is deposited directly in as few as 10 days, compared with the six to eight weeks it takes to get a refund check when paper tax forms are filed by mail.
Using the "Where's My Refund?" feature on the IRS Web site, taxpayers can track their returns and refunds every step of the way.
One feature that's not available this year is TeleFile, which allowed taxpayers to file over the telephone Form 1040EZ, extension Form 4868 and employer's quarterly federal tax return Form 941. Only 3.3 million filers used this feature last year, and the IRS decided that the costs of maintaining it and the growth of other electronic filing options made TeleFile an unnecessary expense.
Taxpayers can e-file forms 941 and 4868, and most 1040EZ filers can use Free File.