By automating your tax preparation and filing, you can save hours of toil. Taxpayers will spend four hours on average completing their 2012 forms, the IRS says. Intuit, the maker of TurboTax, the best-selling tax-preparation software, says its average user will be done in about two hours.
More than 119 million federal income-tax returns were filed electronically last year—at least 81 percent of all individual returns, the IRS estimates. There are lots of good reasons for that. For one, the IRS estimates that it processes refunds for e-filed forms in half the time it takes for paper returns. If you also elect to have the government deposit your refund directly into your bank account, you'll save more time. If you owe money, you can avoid writing and sending a check by using electronic funds withdrawal. Taxpayers in 37 states and the District of Columbia can file their federal and state returns in one transmission to the IRS.
There are also lots of options to prepare and file your federal forms free online. The IRS now offers free, "fillable" electronic versions of Forms 1040, 1040A, and 1040EZ to all taxpayers, regardless of income. They are available through the Free File section of the IRS website. If you don't need commercial tax-prep software to walk you through the process, this is a worthwhile option. You can prepare your forms and file them directly with the IRS free.
For more complicated tax situations, expect to pay $10 to $100 to prepare and file federal returns online through commercial tax-prep services. Of the major online tax-prep companies, H&R Block At Home, TaxACT, and TurboTax also offer downloads and CDs.
H&R Block At Home and TurboTax customers who plan to file the federal and state 1040EZ forms can photograph and upload their W-2s from their smart phones to a company server. The software will automatically populate your tax form. (TurboTax also offers its “SnapTax” for the iPod Touch, and for IRS Form1040A.) With TurboTax and Block, you can file state and federal forms from your smart phone, or finish your taxes online later. The IRS’s app, IRS2Go, lets you track your refund on your smart phone.