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 have two options for filing your return with the Internal Revenue Service (IRS): electronically or by mail.
Both methods of submitting 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 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 advantage of electronic filing is that you will 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 note will typically indicate what triggered the actions and what you can do to fix your tax return.
E-filing is much more secure than paper filing, according to the IRS, since the return, with all your sensitive information, is transmitted directly to the IRS computer system.
Your refund is likely to be processed quicker because e-filing means the IRS does not need to sort or transcribe your tax return in its service center.
There is a lesser chance that the IRS will make a error when calculating your return because IRS employees do not 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 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 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 may 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 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 basic filing. Fees can exceed $100, depending on which type of features you desire.
Glitches are always possible when you’re using the internet. 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 attempt.
Does Not Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain scenarios it doesn’t support. For instance, you can’t file a return for somebody 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.
Advantages 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 instance, if you 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 Need to Build Your Tax Experience
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.
If you would like to learn 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 firsthand all of the calculations and factors your refund requires.
There are several drawbacks to paper filing that make the procedure riskier and more taxing than e-filing.
Increases Chances of Errors
Data transcribers in the IRS must manually input taxpayer information for each 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 try paper filing after years of electronic filing, collecting 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 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 return submission when you file :
- Make sure 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 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’re in, and whether you are 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’re mailing your return near the official filing deadline of April 15, 2021. Bear in mind that you should make a payment with your extension if you think 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 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 information, your e-filed return will be rejected by the IRS as a copy. You must file a paper tax return in this situation 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
- Internet or website outages can cause frustrating delays for e-filers.
- Paper filing requires more time than e-filing and can be overpowering.
- Alternatives to filing taxes in your include hiring a tax pro or participating in filing aid programs.