Originally created 03/10/02

On the money



NEW YORK - Millions of Americans are setting aside their pens and pencils and switching on their computers to prepare and file their income taxes.

That's just fine with the Internal Revenue Service and more than 40 states set up to accept electronically filed tax forms. Returns prepared with tax software or from Web sites tend to be more accurate and easier to process, the IRS says. That, in turn, means refund checks go out faster.

The IRS expects that more than one-third of the 132 million individual tax returns filed this year will be filed electronically, either by individuals or their tax preparers.

First-time e-filers can get good "how to" information from the government's Web site at www.irs.gov/efile.

It explains, among other things, how to create a PIN (personal identification number) as your signature and how to have your refund deposited directly to your checking or savings account. It also includes a list of sites that offer free e-filing programs for low-income families, teen-agers and others.

Most do-it-yourself e-filers either buy commercial software programs or go to Web sites to download their forms. The business is competitive, and a number of the software producers are offering rebates this year as inducements to buyers. Web sites generally cost less.

Many of the programs, especially the deluxe editions, have built-in prompts to help families take advantage of all the changes contained in the tax law enacted last year.

An Augusta company, Rhodes-Murphy Financial Service, has started offering its TaxSlayer professional tax preparation software to consumers online.

Consumers can download the TaxSlayer software on their PCs for free from the company's Web site, www.taxslayer.com. They can then print out their return and mail it to the IRS or pay Rhodes-Murphy $9.95 to process it electronically. Consumers receive an e-mailed confirmation within seconds of filing electronically, and the IRS issues its acceptance or rejection within 24 hours.

Because the software is encrypted, users do not have to worry about privacy issues.

Quicken's TurboTax Premier for desktops and TurboTax Premium at www.turbotax.com allow users to "import" key wage and investment information from more than 50 institutions and payroll processors, said Quicken's Scott Gulbransen.

"We're moving closer to the vision of the 10-minute tax return," he said.

If the program determines that you're getting a big refund, it can give suggestions on how to avoid that in the future. For example, it might suggest that a family increase its contributions to 401(k) retirement accounts or help fill out W-4 forms to change tax withholding.

TurboTax Basic retails for $19.95, while the Premier version is $39.95 after a $10 rebate. Its Premium Web program costs $29.95 for the federal tax form; the state form is an additional $12.95.

Like TurboTax, TaxCut from H&R Block has software programs for individuals and small businesses.

Its Web site, www.hrblock.com, offers tax filers - for a fee - a number of options involving professional tax preparers.

Taxpayers can provide their financial information electronically and have an H&R Block expert do the preparation for $79.95. Or they can complete their own return for a basic fee of $19.95. It then costs an additional $19.95 to get one-on-one advice from an H&R Block professional on a single issue or an additional $29.95 to have the entire return professionally reviewed.

A relatively new online entrant is CompleteTax at www.completetax.com, which was created by CCH Inc., a Riverwoods, Ill., company that designs electronic and print products for tax professionals.

Priced at $17.99 for both a federal and state return, it offers a lot of guidance during preparation as well as a searchable online tax reference library.

"Our bread and butter is developing products for the professional market, and this was a natural extension," said marketing director Robert Dias.

One thing to keep in mind: It pays to use a Web filing site before March 31, because most raise prices in April - the procrastinators' crunch time.