When you file your taxes, you have two options for submitting 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 email can be cheaper, although it requires 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 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’ll receive almost immediate confirmation that the IRS has received your tax return.
If the IRS finds errors on your return, you will receive a rejection notice (usually within 24-48 hours), and the notice will typically indicate what triggered the action 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 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 lesser chance that the IRS will make a mistake when processing your return because IRS employees don’t have 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 need to use a costly 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 advice 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.
When there are tax prep tools which 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 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 site experienced at least seven outages between April 15 and April 17. Also, your online service provider may face outages that could hamper your submitting attempt.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax situations, there are certain scenarios it does not support. By way of example, you can’t file a return for someone who passed away, you can not attach pictures or PDFs to your return, nor will 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 cannot accommodate.
You Have a Rare Filing Situation
E-filing can only do so much. For example, if you 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 pictures or PDFs to supplement your tax return.
You Want 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 ever telling you which forms it is 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 you crave. You may fill out every form line-by-line and see first-hand all the calculations and considerations 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 every paper return they get. As a result of this, it could result in errors that you might have to fix via 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 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.
Tips for Paper Filing
You can do a few things to streamline your yield entry when you file by paper:
- Make sure that your name and Social Security number are on every 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 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 that you can find the correct 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 ought to 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 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 case and mail it in with Form 14039, the”Identity Theft Affidavit,” notifying the IRS of the issue.
- 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 can be overpowering.
- Alternatives to filing taxes on your own include hiring a tax professional or engaging in filing assistance programs.