Early Returns: E-Filing & Tax Refunds Both Up

WASHINGTON - The Internal Revenue Service notes two trends in the early filing season numbers: more electronic returns and bigger refunds. The 13.3 million electronic returns represent an 11 percent increase over this time last year. The average refund -- $1823 -- is 14 percent higher.

Showing especially strong growth of 186 percent were e-filings from taxpayers who did their own returns, either with purchased tax software or through companies offering online tax services.

“We’re pleased with the continuing upward trend in electronic returns,” said Internal Revenue Commissioner Charles O. Rossotti. “More than half of the early filers have e-filed by computer or by phone. These taxpayers appreciate the comfort of having more accurate returns and faster refunds.”

The increase in the average refund may be due to new tax credits which took effect in 1998. Tax credits are a dollar-for-dollar reduction in the amount of tax. If taxpayers eligible for these credits did not lower their withholding during the year, they’ll probably get a bigger refund now.

The child tax credit is up to $400 for each dependent under the age of 17. The total credit begins to phase out for taxpayers with income over $75,000 ($110,000 on a joint return). While this credit normally cannot be more than the tax liability, there are exceptions for some taxpayers who have at least three qualifying children.

Two credits are based on tuition and fees paid for higher education. The Hope credit of up to $1,500 per qualifying student is available for only the first two years of post-secondary education. The lifetime learning credit of up to $1,000 per tax return is available for any level of higher education, but only for courses which began after June 1998. Both education credits phase out as a taxpayer’s income increases from $40,000 to $50,000 ($80,000 to $100,000 for joint returns).

IRS Publication 553, “Highlights of 1998 Tax Changes,” explains these and other new tax laws. It is available through the IRS Web site -- www.irs.ustreas.gov -- or by calling (toll-free) 1-800-TAX-FORM (1-800-629-3676).

As of Feb. 12, the IRS had received nearly one-fifth of the 126 million returns it expects this year -- 23.7 million. It has processed more than $27.3 billion in refunds, compared to $22.7 billion at this time last year. So far, three out of five taxpayers receiving refunds had them deposited directly to their bank accounts.

	1998	1999	% Change
Individual Income Tax Returns:
Total Receipts	24,013,000	23,742,000	- 1.1
Total Processed	15,460,000	16,397,000	6.1
E-filing Receipts:
TOTAL	12,012,000	13,340,000	11.1
TeleFile (phone)	3,271,000	3,051,000	- 6.7
Computer	8,741,000	10,289,000	17.7
Tax Professionals	8,523,000	9,665,000	13.4
Self-prepared	218,000	624,000	185.8
Refunds Certified by the Martinsburg Computing Center:
Number	14,199,000	14,990,000	5.6
Amount of principal	$22.705 billion	$27.333 billion	20.4
Average refund	$1599	$1823	14.0
Direct Deposit Refunds:
Number	7,936,000	9,423,000	18.7
Amount	$16.058 billion	$21.094 billion	31.4

Early Returns:E-Filing & Tax Refunds Both Up

Early Returns:
E-Filing & Tax Refunds Both Up