Ie sweat over the instructions, hope against hope that we're filling out the forms correctly, and then top the day off with a premidnight dash to the post office. Yes, it's April 15. Tax day. That annual spring ritual most of us view as a civic responsibility and a pain in the neck, all rolled into one.

Nothing anyone can do will ever make us love doing our taxes. But the Internal Revenue Service (IRS) now makes it possible to file returns more quickly and easily. Just as you may have become accustomed to ordering theater tickets or a new sweater via your computer or telephone, you can use those same channels to file your income taxes—or even to pay your tax bill.

In 1998, only 20% of individual taxpayers submitted their tax returns to the IRS electronically, by either computer or telephone. But that may change dramatically before long. This year the IRS is expecting nearly 30 million electronic returns, a 20% increase over last year. The IRS' goal is to receive 80% of all tax returns in electronic form within the next 10 years.
      The error rate
      on electronic returns
      is less than 1%,
      compared with
      about 20% for
      paper returns.

Computer filing
To file your taxes from your home computer you need a modem and tax-preparation software that has electronic-filing, or e-filing, capability. After completing your return, you beam it to an electronic return transmitter, which then puts it into a special format before transmitting it to the IRS. The expense to you is the cost of the software, plus you may have to pay an extra e-file fee (usually around $10) to the transmitter. Some software providers, however, e-file for you for no extra charge. In some states, you can simultaneously e-file both your federal and state returns.

An alternative to buying tax software is to use one of the tax-preparation Web sites. You'll pay less than you would for a software package, although you may get less-detailed instruction and you'll still pay an e-filing fee. 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. Thousands of professional tax preparers across the country now offer this service.

Other e-file options include the IRS' Volunteer Income Tax Assistance sites and the Tax Counseling for the Elderly programs. Many of these locations offer e-file. Plus, some employers offer e-file services for their employees.

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" notation, or check out the IRS Web site for a list of participating companies.

Within 48 hours of the transmission, the IRS acknowledges acceptance of your return. No error notice or questioning letter comes to you weeks later. In fact, according to the IRS, because electronic tax returns are computer-verified before they're sent, they contain many fewer errors—less than 1%, compared with about 20% for paper returns.

If you're one of the millions of taxpayers who received a special TeleFile Tax Package in the mail this year, you can e-file your taxes via a Touch-Tone phone. It's a free system available 24 hours a day, seven days a week. Only those who received the special packages in their names, with completely correct name and address information, can use TeleFile. You can't order the package from the IRS or use someone else's.

Here's how TeleFile works. Before you dial up a toll-free number, you must gather your W-2 forms and all other information necessary for completing lines A through G of the Telefile Tax form. You enter the information by phone, the system does the math—including figuring your earned-income credit, if you're eligible, and computing your balance due or refund. You'll get a confirmation number before you hang up as proof of filing. A pilot program for combined federal/state telefiling is being tested in Indiana and Kentucky this year.
      The IRS' goal
      is to receive 80%
      of all tax returns
      in electronic form
      within 10 years.

What about the money?
E-filing by phone or computer means quicker refunds than with paper filing. Usually you'll have your refund within three weeks—or even sooner if you have the IRS directly deposit it into your credit union share draft/checking or share savings account.

If you owe money, you still can use e-file to complete your returns well before deadline, but hold off paying your taxes until April 15, if you prefer. You can opt to pay the traditional way, by check or money order. Or you can pay with your credit card (MasterCard, American Express, Discover only) by dialing 1-888-2PAY-TAX [729-829]. You'll pay a fee, however, for using plastic—to the tune of about 2.5% of your tax due.

Yet another choice available to computer filers is to authorize the IRS to debit your tax payment directly from your account. The debit option now is also available to those taxpayers who must make quarterly estimated tax payments.

©1999 Credit Union National Association Inc.