Should You E-File or File Taxes by Mail?
Know the Pros and Cons of Digital and Paper Tax Returns
When you file your taxes, you’ve got two options for submitting your return with the Internal Revenue Service (IRS): electronically or by mail.
Both methods of submitting have their pros and cons. E-filing is safe, faster, and generally more convenient than paper filing, but filing by mail can be cheaper, although it takes the IRS longer to process refunds.
The Benefits of E-Filing
A scant number of tax professionals–five of them, according to the IRS–took advantage of the new technology at the time. The new filing method eventually caught on though and, as of 2018, approximately 90% of taxpayers e-filed their returns.
The biggest advantage of electronic filing is that you’ll receive almost immediate confirmation that the IRS has received your tax return.
If the IRS finds errors in your return, you will be given a rejection notice (usually within 24-48 hours), and the notice will typically indicate what triggered the action and what you can do to fix your tax return.
E-filing is more secure than paper filing, according to the IRS, since the return, together with all your sensitive information, is transmitted directly to the IRS computer system.
Your refund is very likely to be processed quicker because e-filing means the IRS does not need to sort or transcribe your tax return at its service center.
There is a lesser chance that the IRS will make a error when processing your return because IRS employees don’t have to manually enter your return line-by-line to its system.
You Don’t Have to Use a Tax Prep Program
You don’t need to use an expensive tax preparation program to e-file your taxes–if you’re tax savvy, have a very simple situation, and are prepared to learn, you can fill tax forms in directly using IRS free fillable forms. Be aware that you need to be comfortable completing basic tax forms to use the service as no guidance is provided. And if your adjusted gross income (AGI) is less than $72,000, you might be better off using one of the IRS’ many free-file affiliates.
E-filing comes with some potential headaches, too.
When there are tax preparation tools which are free, many of the leading tax prep firms like TurboTax, TaxSlayer, and H&R Block charge fees for tax returns that go beyond a basic filing. Fees can exceed $100, depending on which type of features you desire.
Vulnerable to Outages
Glitches are always possible when you’re using the internet. In 2020, TurboTax’s website experienced at least seven outages between April 15 and April 17. Also, your internet service provider may face outages that could hamper your filing effort.
Does Not Allow for Certain Filing Situations
Though e-filing supports most tax situations, there are certain situations it does not support. For instance, you can not file a return for someone who passed away, you can not attach pictures or PDFs to your return, nor can you file before the IRS opens e-filing for the year.
Advantages of Paper Filing
Filing a paper return can be very helpful in some specific scenarios that e-filing cannot accommodate.
You Have a Rare Filing Situation
E-filing can only do so much. By way of instance, if you will need to prepare a tax return for someone who passed away, you must file a paper return. Also, paper filing allows you to print and submit pictures or PDFs to supplement your tax return.
You Need to Build Your Tax Expertise
Several online tax prep tools automate the filing process by asking you questions and using your answers to complete forms without telling you which forms it is filing for your benefit.
You can fill out every form line-by-line and see firsthand all of the calculations and considerations your refund requires.
Disadvantages of Paper Filing
There are lots of drawbacks to paper filing that make the process riskier and more taxing than e-filing.
Increases Chances of Errors
Data transcribers at the IRS must manually input taxpayer information for each paper return they get. As a result of this, it could lead to errors that you may have to fix via an amended return.
Overwhelming for Beginners
For filers who attempt paper filing after years of electronic filing, collecting all of the forms necessary for things like student loan interest, mortgage interest, capital gains, and business deductions can be intimidating, and it could lead to missing forms or mistakes.
You Need to Remember to Sign the Return
Veteran paper filers realize that you have to manually sign the paper return you submit, or the IRS will not accept it. Newbie paper filers often forget this fact, resulting in even longer delays than what you’d normally expect with a paper return.
Tips for Paper Filing
You can do a few things to streamline your return entry when you file :
- Make sure that your name and Social Security number are on each page, both back and front.
Double-check your address. This is where the IRS will send any notices, so it’s important that you don’t make a mistake.
Mail your return to the right IRS service center, as the address can change based on which state you are in, and whether you’re including payment with your return. The IRS provides a state-by-state list online so you can find the right address.
Get an automatic extension if you’re mailing your return close to the official filing deadline of April 15, 2021. Bear in mind that you should make a payment with your extension if you think you’ll owe anything. Otherwise, you could be subject to interest and penalties.
The IRS provides a list of acceptable filing options on its own website, which include the following options:
- Hire a tax professional to prepare your return.
There are specific requirements for e-filing or paper filing should you use these programs.
In the unlikely event your identity is stolen and the thief files a tax return with your information, your e-filed return will be rejected by the IRS as a duplicate. You must file a paper tax return in this situation and mail it in with Form 14039, the”Identity Theft Affidavit,” notifying the IRS of this issue.
- E-filing is fast and provides several free options
- Web or site outages can cause frustrating delays for e-filers.
- Paper filing requires more time than e-filing and can be overpowering.
- Alternatives to filing taxes in your include hiring a tax pro or participating in filing aid programs.