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 filing have their pros and cons. E-filing is safe, faster, and more convenient than paper filing, but filing by email 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 though and, as of 2018, roughly 90% of taxpayers e-filed their yields.
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 on 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 much more secure than paper filing, according to the IRS, because the return, with all of your sensitive data, is transmitted directly to the IRS computer system.
Your refund is 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.
Less Human Error
There’s a lesser chance that the IRS will make a mistake 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 a costly tax preparation program to e-file your taxes–if you are tax savvy, have a very simple situation, and are prepared to understand, 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 advice 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.
The Disadvantages of E-Filing
E-filing comes with some potential headaches, too.
When there are tax preparation tools that 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 sort of features you desire.
Glitches are always possible when you’re using the net. In 2020, TurboTax’s site experienced at least seven outages between April 15 and April 17. Additionally, your online service provider may face outages that could hamper your filing 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 not file a return for someone who passed away, you can’t attach images or PDFs to your return, nor will you record before the IRS opens e-filing for the year.
Advantages of Paper Filing
Filing a paper return can be very beneficial in certain scenarios that e-filing can’t 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 must 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 replies to complete forms without telling you which forms it’s filing on your behalf.
If you want 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 you crave. You can fill out every form line-by-line and see firsthand all of the calculations and factors your refund requires.
Disadvantages of Paper Filing
There are lots of drawbacks to paper filing that make the procedure riskier and more taxing than e-filing.
Increases Chances of Errors
Data transcribers at the IRS must manually enter taxpayer information for each paper return they get. As a result of this, it could result in errors that you may have to fix via an amended return.
Overwhelming for Beginners
For filers who try paper filing after years of electronic filing, gathering all 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 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 won’t accept it. Newbie paper filers often forget this fact, leading to even longer delays than what you’d normally expect with a paper return.
You can do a few things to streamline your return 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’s vital that you don’t make a mistake.
Mail your return to the right IRS service center, as the address can change depending 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. Keep in mind that you should make a payment with your extension if you believe you’ll owe anything. Otherwise, you could be subject to penalties and interest.
The IRS provides a list of acceptable filing options on its website, Including the following options:
- Hire a tax professional to prepare your return.
There are specific requirements for e-filing or paper filing if you use one of these programs.
In the unlikely event that 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 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 quickly and provides several free options
- Web 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 pro or participating in filing assistance programs.