Should You E-File or File Taxes by Mail?
When you file your taxes, you’ve got 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 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 moment. The new filing method eventually caught on though and, as of 2018, roughly 90% of taxpayers e-filed their returns.
The biggest benefit of electronic filing is that you’ll 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 repair your tax return.
E-filing is much more secure than paper filing, according to the IRS, because the return, with all of 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 doesn’t have to sort or transcribe your tax return at its service center.
Less Human Error
There’s a lesser chance that the IRS will make a error when calculating your return because IRS employees don’t need to manually enter your return line-by-line into its own system.
You Do Not 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 simple situation, and are willing 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.
While there are tax prep tools that 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 want.
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. Additionally, your online service provider may face outages that could hamper your filing attempt.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain situations it doesn’t support. For instance, you can’t file a return for someone who passed away, you can not attach images 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 beneficial in certain scenarios that e-filing can’t accommodate.
You Have a Rare Filing Situation
For instance, if you will need to prepare a tax return for someone who passed away, you must file a paper return. Also, paper filing lets you print and submit images or PDFs to supplement your tax return.
You Need to Build Your Tax Experience
Several online tax prep tools automate the filing process by asking you questions and using your replies to fill out forms without telling you which forms it’s filing for your benefit.
If you want 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 each form line-by-line and see firsthand all of the calculations and considerations your refund requires.
There are several drawbacks to paper filing that make the procedure riskier and more taxing than e-filing.
Increases Odds of Errors
Data transcribers at the IRS must manually input taxpayer information for every paper return they get. As a result of this, it could lead to errors that you might need to fix via an amended return.
Overwhelming for Beginners
For filers who try 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 might 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, resulting in even longer delays than what you’d normally expect with a paper return.
You can do a few things to streamline your yield submission when you file by paper:
- Make sure 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 vital that you don’t make a mistake.
Mail your return to the perfect IRS service center, as the address can change depending on which state you are in, and whether you are including payment with your return. The IRS provides a state-by-state list online so that you can find the correct address.
Get an automatic extension if you are mailing your return near the official filing deadline of April 15, 2021. Keep 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, Including the following options:
- Hire a tax professional to prepare your return.
Use the Volunteer Income Tax Assistance Program, or the Tax Counseling for the Elderly program, if you are eligible. There are particular 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 information, 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 fast and provides several free options
- Internet or website outages can cause frustrating delays for e-filers.
- Paper filing requires more time than e-filing and may be overpowering.
- Alternatives to filing taxes in your include hiring a tax professional or participating in filing assistance programs.