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 moment. The new filing method eventually caught on however and, as of 2018, roughly 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’ll 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, since the return, together with all your sensitive data, 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 have to sort or transcribe your tax return at its service center.
There is a lesser chance that the IRS will make a mistake when calculating your return because IRS employees don’t need to manually put in your return line-by-line into its system.
You Do Not 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 willing to understand, 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 may be better off with one of the IRS’ many free-file affiliates.
E-filing comes with some potential headaches, too.
When 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 basic filing. Fees can exceed $100, depending on which type of features you desire.
Glitches are always possible once you’re using the net. In 2020, TurboTax’s site experienced at least seven outages between April 15 and April 17. Also, your internet service provider may face outages that could hamper your submitting effort.
Does Not Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain situations it does not support. By way of instance, you can’t file a return for somebody who passed away, you can’t attach pictures or PDFs to your return, nor can you record 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. For instance, if you will need to prepare a tax return for someone who passed away, you have to file a paper return. Also, paper filing lets you print and submit images or PDFs to supplement your own tax return.
You Want to Build Your Tax Expertise
Many online tax prep tools automate the filing process by asking you questions and using your answers to complete forms without ever telling you which forms it’s filing on your behalf.
You can fill out each form line-by-line and see first-hand all 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 in the IRS must manually input taxpayer information for each paper return they get. As a result of this, it might 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, gathering 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, 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 yield entry 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 is vital 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 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. Bear in mind that you ought to make a payment with your extension if you think you’ll owe anything. Otherwise, you might be subject to penalties and interest.
The IRS provides a list of acceptable filing options on its website, which include the following options:
- Hire a tax professional to prepare your own 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 data, your e-filed return will be rejected by the IRS as a duplicate. You have to 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 quickly and provides several free options
- Internet or site outages can cause frustrating delays for e-filers.
- Paper filing requires more time than e-filing and can be overwhelming.
- Alternatives to filing taxes in your include hiring a tax pro or participating in filing aid programs.