Economic downturn has more taxpayers doing their own taxes

— -- Most Americans would rather snake a toilet than do their own taxes, but the economic downturn has led to a sharp increase in do-it-yourself tax returns.

Through April 10, the number of taxpayers who electronically filed self-prepared returns was up 17% from the same period a year earlier, according to the IRS. Today's tax-filing deadline marks the end of tax season, which this year showed that more taxpayers tried to save money by preparing their own returns:

•H&R Block, the nation's largest tax-preparation company, recently reported that returns prepared at its retail outlets were down 6.2% through March 15 from the year-ago period. Returns filed through Block's desktop and online software rose nearly 22%. The company said the shift reflected "price sensitivity of clients due to current economic conditions."

•Jackson Hewitt, the nation's second-largest tax-preparation chain, has forecast a 12% to 13% decline in tax returns prepared in fiscal 2009.

•TurboTax, the nation's largest tax software provider, said sales of its products were up 10% through March 14. While sales of its desktop products fell 12%, sales of its online programs surged 41%, the company said. Online programs are typically less expensive than desktop versions.

Some software providers offer free online preparation and e-filing as a way to market other products. TaxAct Standard, offered by 2nd Story Software, allows taxpayers to prepare, e-file and print their federal tax return for free. TurboTax also offers a free online program for taxpayers with simple federal tax returns.

David Williams, electronic tax administration director for the IRS, says widespread promotion of such free programs may have contributed to the rise in self-prepared, e-filed returns this year. In addition, both TurboTax and H&R Block eliminated a separate charge for e-filing from their desktop programs, he says. That may have encouraged e-filing among taxpayers who previously prepared their returns on desktop software, then printed them out and mailed them in, he says.