1. It’s easier. Tax preparation software prefills a lot of information (especially if you get your W2 online). It’s quicker to punch in numbers on your keyboard than to try to write it all out legibly.

2. Fewer mistakes. Again, tax preparation software makes it easier by doing all the math for you. Fewer mistakes mean a return that is processed faster.

3. No missing tax breaks. The tax program you use will be loaded with all the new tax rules and allowable deductions, whereas some IRS forms this year have some deduction lines missing and taxpayers who don’t know about those deductions can miss some important tax savings.

4. It’s faster. The IRS estimates that it processes electronically-filed tax returns in half the time it takes to process paper returns.

Buying a good tax preparation software might save you money and pay for itself. If your adjusted gross income is less than $52,000, you can use the IRS’s Free File service by choosing an e-file partner company from the IRS website. Electing for direct deposit saves time too and gets your refund to you even faster.

According to CNN Money, most Americans are clueless when it comes to taxes. 75% of people polled didn’t even know this year’s filing deadline date (it’s April 17).

As we reported earlier, many people are not claiming the telephone tax refund and of those who are, many are incorrectly filing for inflated refunds.

From misconceptions about the AMT (Alternative Minimum Tax) to being uninformed about standard deductions and exemptions, a lot of Americans are less prepared to do their own taxes than they think they are. The result could be receiving a lower refund than they are due or the unexpected arrival of a bill from the IRS.

If you have a complicated return, you may want to use a paid tax preparer who is familiar with the ever-changing tax code.

Here’s a way to make good on that New Year’s resolution to save money with a little help from the IRS. This year the IRS is offering to split your refund among two or three checking or savings accounts when you use direct deposit.

If you are due a refund, simply file IRS’ Form 8888, Direct Deposit of Refund to More Than One Account, to divide your refund among two or three different accounts. You can specify how much of the refund you want sent to each account. The amount sent to any one account must be at least $1.

If you are filing a joint return, the IRS will deposit it to a joint account or one held in either filer’s name but check with your bank to make sure they will accept a joint refund deposit to an individual account.

You can still elect to have your refund deposited to a single account by filling out the direct deposit lines on your form 1040 or 1040a. You need file a separate form 8888 if you wish to split the deposit among two or three accounts.

So why not earmark part of your refund for your savings account this year? It might be a great boost to start saving in 2007.

For more information on splitting your direct deposit refund see the FAQ page at the IRS website.

Early returns received by the IRS indicate many taxpayers are making mistakes when requesting the telephone tax refund. The telephone tax was institued in 1898 as a “luxury tax” but was recently ruled to be unconstitutional. Taxpayers are entitled to a refund equalling three years of actual Telephone Excise Tax paid or may claim the standard amount on the IRS forms.

Early mistakes found on a sample of 2006 returns filed during January include:

* Filling out the Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax, incorrectly by failing to show a refund amount on Line 1a. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. Filing an incomplete form typically delays a refund and often leads to follow-up correspondence with the IRS. More than 10 million low-income people, many of them senior citizens, are expected to file this form.

* Failing to request the telephone tax refund on a regular federal income-tax return in situations where the taxpayer appears to qualify. More than one-third of early filers did not request the telephone tax refund. This includes filers on Forms 1040, 1040A, 1040EZ, 1040NR and 1040NR-EZ. About 136 million individuals and couples are expected to file one of these forms, and most will, likely, qualify for the telephone-tax refund. Anyone who files one of these forms cannot file Form 1040EZ-T.

* Filing duplicate requests. Usually, this involves filing both Form 1040EZ-T and a regular income-tax return. Anyone who files a regular return cannot file Form 1040EZ-T. Doing so will delay any refund for months and result in a phone call or letter from the IRS.

* Requesting a refund that appears to be based on the entire amount of the taxpayer’s phone bills, rather than just the three-percent tax on long-distance and bundled service.

* Requesting a refund in the thousands of dollars, suggesting that the taxpayer paid more for telephone service than they received in income.

The IRS is investigating potential abuses among early filers who requested large and apparently improper amounts for the telephone tax refund. They will take prompt action against taxpayers who request improper refund amounts and the return preparers who help them.

For help in filing for the telephone tax refund, see the IRS website.