IRS wants more to follow Iowa e-filers

Iowans may use e-file, the Internal Revenue Service's electronic income tax return filing system, which is free this year to Americans of all incomes.

The percentage of Iowans e-filing 2008 income tax returns was the nation's highest, at

77 percent, IRS spokesman Christopher Miller said. It was 72 percent for the 2007 income tax year.

IRS officials hope even more Americans jump on the e-file bandwagon.

Friday was the first day returns were accepted for the 2009 tax year using the agency's Free File software. IRS officials expect an early e-filing crush because of the number of Americans expecting refunds. E-filing gets refunds to taxpayers in as few as 10 days, faster than paper returns.

“No. 1 is, it reduces mistakes,” David Williams, IRS director of electronic tax administration, said. “And not just math calculations, but with the mistake of leaving money on the table.”

Williams said the e-file system helps flag tax breaks enacted for the 2009 tax year that taxpayers might be eligible to receive. He said only one of the new breaks cannot be filled out with Free File. First-time homebuyers tax credits must be submitted in paper returns because of the amount of documentation required.

Younger taxpayers are by far the biggest e-file users, Williams said, because of their comfort with technology. Williams said the IRS encourages older Americans, who mainly use paid preparers, to be sure their preparer e-files their return.

One reason e-fiing declined last year was an expansion of free filing options tax software companies offer. The companies typically offer basic free filing software for individuals with simple returns, hoping the taxpayers buy paid products when their returns become more complex.

The IRS saves about $2.30 for each taxpayer who e-files instead of using a paper return. Williams said the IRS also is confirming receipt of e-filed returns much faster than in previous years.