By Eric Hayes
Special to the Military Times (Army, Navy, Air Force, Marines)
January 31, 2006

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Nearly 14 million taxpayers are expected to file their taxes online this year. Online tax filing is the fastest-growing favorite among America's 52 million do-it-yourself taxpayers.

Most U.S. taxpayers - nearly 60 percent by the IRS' count - surrender their paperwork to a neighborhood tax office. But the major online tax-preparation sites are seeing a growing number of taxpayers switching from the local tax office to online services. With many military families living apart, online filing can be an excellent option.

For example, let's say your spouse and family are in the Virginia area and you are deployed. It's tax time, and your W-2 and maybe a banking interest statement somehow find their way to you in the middle of the Indian Ocean or on the side of a mountain in Afghanistan, instead of to your mailbox in Virginia.

With traditional tax preparation, this may cause a problem: You have to send the W-2 or other tax document back home, and that could take awhile. With online tax preparation, it's no problem because both husband and wife can access their return from anywhere in the world. So, if my W-2 finds me rather than my mailbox, I simply have my wife start the return with the information she has. I then access our return (as long as I know what the password and user name are) and fill in my W-2 and banking information.

After I update the information, each of us can review the return online before one of us presses a button to file it.

PC software was once a good bet, but now the purchase process can induce its own tax-time trauma. The overwhelming variety of versions, the complicated bundle and rebate options, and the uncertainties of installation and endless updates can make buying tax software as daunting as any government form.

But a taxpayer who prepares and files online can see a refund in just a few days in some cases and two weeks in most others if he has the refund check deposited directly to his bank account. A paper-filed return may only arrive at the service center for processing within a week.

Price Break

There was a time when a franchise tax office provided a feeling of confidence and comfort for the timid taxpayer, but that comfort could come at a pretty steep price. According to one national chain, the average client can expect to pay about $150 to have his taxes prepared. And the tax office staff relies heavily on tax software that is generally equivalent to what is available online.

Many online services provide live chat assistance as well as telephone support while taxpayers complete their returns and offer similar accuracy guarantees as the national chains - all for about one-third the price.

Some states exempt military income from taxation if it was earned outside the home state. Some states give exclusions, and others flat out tax it.

So, if you can buy a book or shop online, you can prepare your taxes online, save money and feel confident. And how much more comfortable can you get than sitting in a familiar environment while you take all the time you want - or your commanding officer will give you - to prepare your taxes, especially if you and your spouse are miles apart?

Consider this: An Internet tax-filing service costs $20 to $90 and delivers a professional result. With little online experience and a willingness to try something new, savvy taxpayers can save themselves significant time and hassle. And they can still get their refunds quicker.

Eric Hayes is a senior tax analyst at www.taxbrain.com. E-mail him at ehayes@petzent.com or call him at (209) 835-2720, Ext. 2118.

About TaxBrain.com® Online Tax & E-file Service

TaxBrain.com is the only web-based tax solution delivering online preparation, filing, professional assistance and representation in all 50 states. TaxBrain.com is a full-service online tax center providing tax advice, tools, and resources all year to help taxpayers manage their tax burden with greater confidence and ease. For more information visit www.taxbrain.com/press.

About Petz Enterprises, Inc.

Petz Enterprises, Inc. (a closely-held California corporation) is a software development company and a leading provider of tax preparation and filing solutions for the professional and consumer markets, helping to automate and simplify federal, state and local tax compliance. PEI's Crosslink® line of professional tax software products enable tax practitioners and service bureaus to accurately prepare and file large volumes of individual tax returns. Founded in 1974, Tracy, CA-based PEI is dedicated to serving the needs of the professional tax community and individual taxpayers worldwide. For more information, visit http://www.petzent.com.