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’ve got 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 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 time. The new filing method eventually caught on however and, as of 2018, approximately 90% of taxpayers e-filed their returns.
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 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 more secure than paper filing, according to the IRS, because the return, together with all of 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 have to sort or transcribe your tax return at its service center.
There’s a lesser chance that the IRS will make a error when calculating your return because IRS employees don’t need to manually enter your return line-by-line into its own system.
You Don’t Have to Use a Tax Prep Program
You don’t need 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 understand, 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 with one of the IRS’ many free-file affiliates.
While there are tax preparation tools that are free, many of the leading tax prep companies 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 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 attempt.
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 not 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 beneficial in some specific scenarios that e-filing can’t accommodate.
You’ve Got a Rare Filing Situation
By way of instance, if you will need to prepare a tax return for someone who passed away, you must file a paper return. Also, paper filing allows you to print and submit pictures 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 for your benefit.
You can fill out each form line-by-line and see first-hand all the calculations and considerations your refund requires.
There are several drawbacks to paper filing which make the procedure riskier and more taxing than e-filing.
Increases Odds of Errors
Data transcribers in the IRS must manually enter taxpayer information for every paper return they receive. As a result of this, it could result in errors that you might have to fix through an amended return.
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 could result in missing forms or mistakes.
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 that 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 is important that you don’t make a mistake.
Mail your return to the perfect IRS service center, since the address can change based on which state you are in, and whether you are 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. Keep in mind that you should make a payment with your extension if you think you’ll owe anything. Otherwise, you might 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 own return.
Use the Volunteer Income Tax Assistance Program, or the Tax Counseling for the Elderly program, if you’re eligible. 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 data, 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 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 may be overwhelming.
- Alternatives to filing taxes in your include hiring a tax professional or participating in filing assistance programs.