Should You E-File or File Taxes by Mail?
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 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, though it takes the IRS longer to process refunds.
The Advantages of E-Filing
E-filing was first 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 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 will receive 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, because 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.
Less Human Error
There’s a lesser chance that the IRS will make a error when calculating your return because IRS employees do not have to manually enter 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’re tax savvy, have a very simple situation, and are willing to learn, you can fill tax forms in directly with 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 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 sort of features you want.
Vulnerable to Outages
Glitches are always possible once you’re using the internet. In 2020, TurboTax’s website experienced at least seven outages between April 15 and April 17. Additionally, your internet service provider may face outages that could hamper your submitting effort.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain scenarios it doesn’t support. By way of example, you can’t 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 certain scenarios that e-filing can’t accommodate.
You Have a Rare Filing Situation
By way of instance, if you will need to prepare a tax return for somebody who passed away, you have to file a paper return. Also, paper filing allows you to print and submit pictures or PDFs to supplement your 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 replies to fill out forms without telling you which forms it’s filing on your behalf.
You may fill out each form line-by-line and see first-hand all of the calculations and considerations your refund requires.
Disadvantages of Paper Filing
There are lots of 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 receive. Because of this, it could lead to errors that you may need to fix via an amended return.
Overwhelming for Beginners
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 might result in 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 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 entry when you file by paper:
- Make sure your name and Social Security number are on each page, both back and front.
Double-check your address. 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, as the address can change based 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 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 ought to make a payment with your extension if you think you’ll owe anything. Otherwise, you could be subject to penalties and interest.
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 return.
There are particular 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 fast 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 overpowering.
- Alternatives to filing taxes on your own include hiring a tax pro or engaging in filing assistance programs.