Should You E-File or File Taxes by Mail?
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 filing 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 Advantages 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 however and, as of 2018, approximately 90% of taxpayers e-filed their yields.
The biggest benefit 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 note 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 of 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.
There’s a lower chance that the IRS will make a mistake when processing your return because IRS employees don’t need to manually enter your return line-by-line into its own system.
You Don’t Have to Use a Tax Prep Program
You don’t have to use a costly 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 might be better off with one of the IRS’ many free-file affiliates.
E-filing comes with some potential headaches, too.
While there are tax prep tools which are free, many of the top tax prep firms like TurboTax, TaxSlayer, and H&R Block charge fees for tax returns that go beyond a simple filing. Fees can exceed $100, depending on which type of features you desire.
Vulnerable to Outages
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 attempt.
Does Not Allow for Certain Filing Situations
Though e-filing supports most tax situations, there are certain situations it doesn’t support. By way of example, you can not file a return for someone who passed away, you can’t 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 some specific scenarios that e-filing cannot accommodate.
You’ve Got a Rare Filing Situation
E-filing can only do so much. By way of example, if you will 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 Need to Build Your Tax Experience
Many 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 for your benefit.
If you would like to know 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 that 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 lots of drawbacks to paper filing which make the process riskier and more taxing than e-filing.
Increases Odds of Errors
Data transcribers in the IRS must manually enter taxpayer information for every paper return they get. Because of this, it could result in errors that you might have to fix through an amended return.
Overwhelming for Beginners
For filers who attempt 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 might lead to missing forms or errors.
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 won’t 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 yield submission when you file :
- Make sure that your name and Social Security number are on every page, both back and front.
Double-check your address. 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 right IRS service center, since the address can change based on which state you’re in, and whether you’re 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 near the official filing deadline of April 15, 2021. Keep in mind that you ought to make a payment with your extension if you believe 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 own 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 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 have to file a paper tax return in this case 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
- Web or site 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 aid programs.