Know the Pros and Cons of Digital and Paper Tax Returns
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 mail can be cheaper, though it requires 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, approximately 90% of taxpayers e-filed their yields.
The biggest benefit of electronic filing is that you will 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 your sensitive data, is transmitted directly to the IRS computer system.
Your refund is very 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’s 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 to its own system.
You Don’t 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 simple situation, and are prepared to learn, you can fill tax forms in directly with 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 with one of the IRS’ many free-file affiliates.
While 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 when 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 filing effort.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax situations, there are certain situations 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
For example, 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 Need to Build Your Tax Expertise
Several online tax prep tools automate the filing process by asking you questions and using your replies to complete forms without ever 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 can fill out each form line-by-line and see firsthand all the calculations and considerations your refund requires.
There are several drawbacks to paper filing that make the process 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 could result in errors that you may have to fix through an amended return.
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 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 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.
You can do a few things to streamline your yield submission when you file :
- Make sure your name and Social Security number are on every page, both front and back.
This is where the IRS will send any notices, so it’s important 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 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 ought to make a payment with your extension if you believe you’ll owe anything. Otherwise, you might 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 should 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 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 the matter.
- E-filing is quickly 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.