Should You E-File or File Taxes by Mail?
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 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, although it requires the IRS longer to process refunds.
The Benefits of E-Filing
E-filing was initially 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 this 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 will receive almost immediate confirmation that the IRS has received your tax return.
If the IRS finds errors in your return, you’ll 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 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 lower chance that the IRS will make a error when processing your return because IRS employees do not need to manually enter your return line-by-line to its own system.
You Do Not Have to Use a Tax Prep Program
You don’t have to use an expensive 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 guidance 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
While there are tax prep 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 simple filing. Fees can exceed $100, depending on which sort of features you desire.
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 online service provider may face outages that could hamper your submitting effort.
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 not file a return for somebody who passed away, you can’t attach images or PDFs to your return, nor can 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
By way of 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 tax return.
You Want to Build Your Tax Experience
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.
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 several 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 get. As a result of this, it could lead to errors that you may have to fix via an amended return.
For filers who attempt 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 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 return entry when you file by paper:
- Make sure that your name and Social Security number are on each page, both front and back.
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 that 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. Bear in mind that you should make a payment with your extension if you think you’ll owe anything. Otherwise, you might be subject to penalties and interest.
The IRS provides a list of acceptable filing options on its website, which include the following options:
- Hire a tax professional to prepare your own return.
There are specific requirements for e-filing or paper filing if you use 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 duplicate. 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 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 may be overpowering.
- Alternatives to filing taxes in your include hiring a tax pro or engaging in filing assistance programs.