When you file your taxes, you have two options for filing your return with the Internal Revenue Service (IRS): electronically or by mail.
Both methods of submitting have their advantages and disadvantages. E-filing is safe, faster, and more convenient than paper filing, but filing by email can be cheaper, though it takes the IRS longer to process refunds.
The Benefits of E-Filing
E-filing was initially introduced in 1986, and it got off to a slow start. A scant number of tax professionals–five of them, according to the IRS–took advantage of the new technology at the moment. The new filing method eventually caught on however and, as of 2018, roughly 90% of taxpayers e-filed their yields.
The biggest advantage of electronic filing is that you will receive almost immediate confirmation that the IRS has received your tax return.
If the IRS finds errors on your return, you will be given a rejection notice (usually within 24-48 hours), and the notice will typically indicate what triggered the actions 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 faster because e-filing means the IRS doesn’t need to sort or transcribe your tax return in its service center.
Less Human Error
There’s a lower chance that the IRS will make a error when calculating your return because IRS employees don’t have to manually put in your return line-by-line to its system.
You Do Not Have to Use a Tax Prep Program
You don’t have to use an expensive tax preparation program to e-file your taxes–if you are tax savvy, have a simple situation, and are prepared to learn, you can fill tax forms in directly using IRS free fillable forms. Be aware that you should 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 may be better off using one of the IRS’ many free-file affiliates.
The Disadvantages of E-Filing
E-filing comes with some potential headaches, too.
When there are tax preparation tools which are free, many of the leading tax prep companies 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 sort of features you desire.
Glitches are always possible once you’re using the net. In 2020, TurboTax’s website experienced at least seven outages between April 15 and April 17. Also, your online service provider may face outages that could hamper your filing effort.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain situations it does not support. For example, you can not file a return for somebody who passed away, you can not attach pictures or PDFs to your return, nor can you record before the IRS opens e-filing for the year.
Benefits 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
For instance, if you need to prepare a tax return for someone who passed away, you have to file a paper return. Also, paper filing allows you to print and submit images or PDFs to supplement your tax return.
You Want to Build Your Tax Experience
Several online tax prep tools automate the filing process by asking you questions and using your answers to fill out forms without telling you which forms it’s filing on your behalf.
If you would like to learn about, and better review, the details of your tax return, including all forms related to your tax situation, filing a paper return provides the transparency you crave. You can fill out every form line-by-line and see first-hand all the calculations and factors your refund requires.
There are several drawbacks to paper filing that make the process riskier and more taxing than e-filing.
Increases Odds 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 result in errors that you might have to fix through an amended return.
For filers who try paper filing after years of electronic filing, collecting all the forms necessary for things like student loan interest, mortgage interest, capital gains, and business deductions can be intimidating, and it could result in missing forms or errors.
You Will 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, leading to 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 submission when you file :
- Make sure that your name and Social Security number are on each page, both back and front.
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 perfect IRS service center, since the address can change depending on which state you’re in, and whether you are including payment with your return. The IRS provides a state-by-state list online so you can find the correct address.
Get an automatic extension if you are mailing your return close to the official filing deadline of April 15, 2021. Keep in mind that you should make a payment with your extension if you believe you’ll owe anything. Otherwise, you might be subject to interest and penalties.
The IRS provides a list of acceptable filing options on its website, Including the following options:
- Hire a tax professional to prepare your own return.
Use the Volunteer Income Tax Assistance Program, or the Tax Counseling for the Elderly program, if you’re eligible. There are specific requirements for e-filing or paper filing if you use one of these programs.
In the unlikely event your identity is stolen and the thief files a tax return with your data, your e-filed return will be rejected by the IRS as a copy. 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 matter.
- E-filing is quickly 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 professional or engaging in filing aid programs.