Just a few years ago, my April 15 was characterized by a frantic evening run to the library for missing tax forms. Later that same evening came the mad dash to the copy shop and the post office. In between, there was the tedious, hand-cramping process of filling in "final versions" of tax forms, making sure all my print was legible and all supporting sheets were properly attached.

For me, those days are long gone, but according to 2000 IRS figures, more than 70% of Americans are still wrestling with pre-Web tax-filing tools. If you are reading this online and are still among this majority, it's time to take the leap. At a minimum, you should become familiar with the excellent IRS website, which provides online access to all IRS forms and publications. To really simplify your tax season, however, consider electronic filing.

Benefits of electronic tax filing
There are really two options to consider, beginning with tax software. These programs help you overcome inertia and get an early start by breaking the whole ordeal into manageable chunks. Stepping you logically through the process, the software then helps to maintain your forward momentum. Today's software not only eliminates arithmetic errors but might also net you some money-saving filing options.

The second option -- which can be distinct from using software to prepare your return -- is filing your return electronically. The key benefit here is that you get your check sooner, assuming that the IRS owes you money. You also avoid postage and the last minute run-around, as well as reducing the odds of an error on the IRS keypunch side.

Electronic filing options
Convinced? If so, we've broken out your electronic filing options below, ranked in order from simplest to most complicated:

  • Telephone filing -- If you file the E-Z form, you may be eligible for this service. If so, you should have received a TeleFile package through the mail by now. According to the IRS online TeleFile FAQ, you can't file by phone unless you have received this package.

  • Let a pro do it all -- If you prefer to have a professional do your taxes, you can select one that is also an authorized IRS e-file provider. To help you find a convenient pro who offers electronic filing, the IRS website provides a search function by zip code.

  • Let a pro file electronically -- Take your completed form -- either filled in by hand or generated by software -- to an authorized IRS e-file provider, using the same search function mentioned above.

  • File online yourself -- You can use some tax-filing software online, without having to purchase it for your PC. The most common choices are TurboTax from Quicken and Kiplinger TaxCut from H&R Block, but the IRS provides a handy list of all authorized software partners (you can access Quicken through a partnership with the Fool). Most online options serve the software interactively (as opposed to downloading it all to your PC), so you'll tie up your phone line while you work through your return. Also, the data you enter is usually stored on their Web servers, as opposed to on your PC's hard drive, but you can return to the site and log in to your forms as many times as it takes to complete them. Often you can go through all the online steps for free; the charge comes when you try to print and/or file the return.

  • Buy PC software -- This option is very similar to the one above, as the software you buy from a given company -- and the actual electronic connection to the IRS -- will be very similar to the software this same company offers via the Web. The big difference is that you'll run the program and store data locally, on your PC, which frees your phone line and provides the safest possible storage of your personal data. You can compare competing packages using the same IRS listing of websites mentioned above. In addition, you can purchase several kinds of tax software through the Fool's partnership with Amazon.com

Buying your own copy of the software may also get you a more robust menu of features, access to free annual updates, and free or cut-rate electronic filing. If you are a diligent user of popular personal finance programs like Quicken or Microsoft Money, buying your own copy of their tax software is generally a good deal, since these provide a slick, time-saving software interface between your financial records and your tax forms. Quicken leads the pack when it comes to integrating these outside records with their tax software, and, beginning this year, even offers automatic downloading of investment records from participating brokerages.

One final word of advice on this topic: Accurate financial records on your PC are not a requirement for using tax preparation software. In fact, the software may be most useful to those who lack such discipline. If you're behind the eight ball on taxes, now is probably not the best time to start setting up your complete financial records on your PC. Use the tax preparation software first and, if you like it, you can take on the company's comprehensive personal finance software later.

Bumps in the road
Before you get too far down the electronic filing path, there are a few things you should know:

  • Not all tax forms can be filed electronically -- If a single form has to be done in pencil, the whole ball o' wax has to be submitted by mail. So, if your return will include any forms beyond the most basic, check to be sure that these don't preclude filing electronically before you spend any money. Examples include forms for: noncustodial divorced parents claiming exemptions for their children; a contribution of a non-cash item to charity (other than securities); the amending of an earlier return; and heavy (unFoolish) stock trading. A recent BusinessWeekarticle provides additional information on this subject.

  • You'll need an IRS PIN -- Beginning this year, you are no longer required to follow up electronic filing with a signed IRS declaration form sent through the U.S. mail. Your software or e-file provider can step you through the process of getting an IRS personal identification number (PIN) instead, when it comes time to actually file your return. It is notnecessary to obtain the PIN in advance.

  • State tax forms -- Check to see that any software you choose is capable of completing and filing your state tax forms as well. That IRS software listing we've mentioned twice already (and which we've just upgraded from handy to handy-dandy) tells you which programs can handle which states. On a related note, 37 states have now signed on to a federal/state e-fileprogram that enables joint electronic filing of both federal and state forms in one shot. If you live in one of these states, you might want to check your software or e-file provider to see if they can pull this off.

  • Don't take the early refund! -- Many providers will attempt to sucker you into a Refund Anticipation Loan (RAL). Although they're unlikely to frame the quick refund as a loan, this is exactly what it is. If you run the numbers on these loans, you will note most charge a gargantuan interest rate. Generally, even a high-interest credit card would be a better option, although we don't recommend this either unless the need is dire.

  • E-payments -- Not only can you file your return electronically, but you can also pay any balance you may owe electronically as well, either through direct debit from a checking or savings account or by credit card. Advantages of this include the ability to file early but schedule your payment for April 16 (the deadline this year, since the 15th falls on a Sunday), and the ability to avoid filing forms for certain payments, such as estimated tax payments. However, for credit card payments, there are usually fees involved. For more information on e-payments, check out Roy Lewis's (TMF Taxes) article on the subject.

  • Security -- There are two things to consider here. First, there is the long-time storage of your personal records on the Web. The IRS-approved software providers that offer an online option go to great lengths to secure their Web servers, but if you want to virtually eliminate this risk, you should purchase tax preparation software that resides -- and stores data -- on your PC. If you have an always-on DSL or cable Web connection, get that firewall software installed before you start your taxes!

    Second is the actual transmission of the information to the IRS -- the electronic filing. Here you have to compare the transmission of encrypted digital signals on underground cable and raised phone lines to the U.S. mail. Since Congress has charged the IRS with attaining an 80% electronic filing rate by 2007, it's clear that your legislators think it's safe (add your own editorial comment here).

That's the long and short of IRS electronic filing (ouch). When it comes to the bigger tax picture, though, don't forget about our top-notch Foolish Tax Center where Roy Lewis (TMF Taxes) provides some of the best free tax information available anywhere.

The Fool offers plenty of other tax resources to boot. Need to open and contribute to an IRA before tax day in April? Our special IRA area and Discount Brokerage Center are a good places to start. Get it all done early and spend the evening of April 15 at the movies!

Paul Commins does not own shares in Intuit, Microsoft or H&R Block, although he is a frequent contributor to the IRS. To see his stock holdings, view his profile. The Motley Fool is investors writing for investors.