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How to get the fastest tax refund

Over 109 million filers received a tax refund, with an average refund of $2,913 last year. If you are expecting a tax refund this year, then getting your refund faster, with the least hassle and lowest cost will be your goal right about now. Here is what you need to do.

Use a tax preparation program

About half of all individuals choose the do-it-yourself approach when it comes to preparing and filing their taxes. Given the complexity of the tax forms and instructions, it's a no-brainer to use a tax preparation program to prepare and file your return. While there are many tax prep products available, the two most widely used, reviewed and recommended products are Intuit's TurboTax and H&R Block's At Home. Both are widely recommended and if you have been using one of these programs, then stick with what you have and there is little reason to switch.

I have been a user of TurboTax for over 17 years and I am enrolled to practice before the IRS, so I also have a lot of experience in preparing and filing tax returns with this program. Based on my personal experience with TurboTax, I strongly recommend it - especially if you have many types of deductions, report income from a small business or investments, and like to enter your information directly into the forms on the screen.

However, if you are new user of tax prep programs, or you have some tax issues that you may need help with, then try H&R Block's At Home. The great thing about it is that if you start out using the online program and then need the help of a professional, you can walk into one of the 11,000 H&R Block tax prep centers, where they will review, prepare and file your return for you. The H&R Block Best of Both service offers the use of their At Home program and the service of a tax professional to review, correct and sign your tax return.

You really can't go wrong with either TurboTax or H&R Block's At Home and both offer an online version of their tax prep programs at a lower cost and even free for qualified filers.

e-File your tax return

If you use a tax preparation computer program, then you should definitely use e-file, which is straightforward and easy. The process allows you to electronically "sign" your return using a five-digit, self-selected PIN and information from your prior returns. The most comforting part of this part of the process is that an electronic notice is generated, with includes an IRS declaration control number, or "DCN," which provides official proof that the return is filed and accepted by IRS. No more rushing to the post office to mail the forms return receipt requested. The benefits of e-filing your tax return are faster refunds, secure processing and acknowledgement from the IRS that your return has been received within 48 hours.

Direct deposit your refund

Direct deposit has become the most popular way to receive a tax refund. Last year over 79 million tax refunds, or over 72 percent, were deposited directly into accounts, up 6 percent from 2010. When using a tax filing program, select and use the option to directly deposit your refund into a bank account, which will also speed up your tax refund. You can even choose to have the refund split up to three different U.S. financial institutions. Use Form 8888, Allocation of Refund and make sure to provide the correct account and routing numbers on the form.

However, beware that direct deposit can get tricky when you chose to direct the deposit into an individually owned bank account for a refund from a joint tax return. Some financial institutions will reject such a deposit, which will delay the time to get your refund. Just check with your bank to ensure they will accept the deposit of your refund before you make this election.

So how much faster can e-filing and direct deposit speed up your tax refund?

File by paper and you would typically receive a refund via paper check in about six weeks or more.

File electronically but request a refund by paper check and you could wait three to four weeks for your tax refund.

But file your tax return electronically and elect direct deposit, and you should receive the tax refund in as little as two weeks.

Ray Martin

View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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