Filing State Income Tax Return Has Never Been Easier.

State departments of revenue now offer taxpayers the opportunity to electronically file (e-file) their income tax returns by using a tax professional service, a personal computer with Internet access or by simply using a telephone. Every state that levies a personal income tax, except Hawaii, allows e-filing of state income tax returns.

Electronic filing of state tax returns accounted for 17 percent of total returns filed in 1999, according to the Federation of Tax Administrators. Estimates are that the total will grow to more than 22 percent in 2000.

Taxpayers can use professional tax preparers to e-file their returns with the IRS and their state department of revenue. Tax preparers use software to complete federal and state returns and transmit them electronically. Tax preparers most often charge a fee for e-filing. Refunds to taxpayers can be electronically deposited into bank accounts, and e-filing also allows for electronic withdrawals from taxpayers' bank accounts.

Eleven states also allow individual taxpayers to e-file for free using a department of revenue Web site. These states provide the taxpayer a return that can be filled out online or, in some cases, can be downloaded with state-supplied software and transmitted via the Internet later. Another option is for taxpayers to use an approved Web site that charges a fee for preparing and filing returns. In most cases, the taxpayer needs to complete the federal and state return at the same time.

Taxpayers also have the opportunity in 28 states to file their state income tax returns using a telefile system that requires only access to a touch-tone telephone. Individuals enter all of their tax return information by using a telephone keypad. The telefile systems also do the math on the return to ensure that the computations are error-free.

Regardless of the type of the electronic filing system, all are intended to speed up the process of receiving a tax refund from the state. In cases where the taxpayer owes taxes, the systems allow for payments to be made any time up to the tax-filing deadline.

No matter how easy states make it for taxpayers, however, the Federation of Tax Administrators notes that half of all taxpayers wait until April to file.

STATES THAT OFFER    PERCENTAGE OF
ELECTRONIC FILING    RETURNS FILED
                     ELECTRONICALLY
Alabama                    22%
Arizona                     8
Arkansas                   37
California                 15
Colorado                   17
Connecticut                21
Delaware                   14
District of Columbia        5
Georgia                    23
Idaho                      10
Illinois                   17
Indiana                    19
Iowa                       22
Kansas                     18
Kentucky                   20
Louisiana                  24
Maine                       5
Maryland                   13
Massachusetts              25
Michigan                   12
Minnesota                  19
Mississippi                20
Missouri                   26
Montana                    30
Nebraska                   21
New Jersey                 13
New Mexico                  8
New York                   12
North Carolina             17
North Dakota                5
Ohio                       19
Oklahoma                   17
Oregon                     11
Pennsylvania               15
Rhode Island                5
South Carolina             48
Utah                       13
Vermont                     5
Virginia                   17
West Virginia              16
Wisconsin                  16
U.S. Average               17
Source: Federation of Tax Administrators