By the end of this year's tax season, the Internal Revenue Service estimates that more than one out of every four taxpayers will have filed their returns electronically, representing a 17 percent increase from last year.
Advocates say electronic filing is cheaper, faster and more accurate than traditional paper returns.
Taxpayers who send in paper returns must be notified by traditional mail if there are mathematical mistakes or discrepancies in their returns, but electronic filers get a confirmation code within 24 hours saying whether their returns have been received or returned because of a mistake. Basically, you've eliminated one step in the process. Additionally, most states allow taxpayers to submit returns for local taxes at the same time they file their federal tax returns. Verenda Smith, a spokeswoman for the Federation of Tax Administrators, an association of state tax agencies, said that in Georgia and North Carolina, half the population is already filing state returns electronically. The figure is even higher in South Carolina, where 80 percent of the returns are being filed online or with software.