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 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 this 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 in your return, you will receive a rejection notice (usually within 24-48 hours), and the notice will typically indicate what triggered the actions and what you can do to repair your tax return.
E-filing is much more secure than paper filing, according to the IRS, because the return, 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 have to sort or transcribe your tax return at its service center.
Less Human Error
There’s a lesser chance that the IRS will make a error when calculating your return because IRS employees don’t need to manually put in your return line-by-line into its own system.
You Don’t 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 are tax savvy, have a very simple situation, and are willing to understand, 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.
The Disadvantages of E-Filing
When there are tax prep tools which are free, many of the top tax prep companies 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 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 example, you can’t file a return for somebody who passed away, you can’t attach images or PDFs to your return, nor can you file before the IRS opens e-filing for the year.
Benefits of Paper Filing
Filing a paper return can be very helpful in some specific scenarios that e-filing can’t accommodate.
You Have a Rare Filing Situation
By way of example, if you need to prepare a tax return for somebody 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 Need to Build Your Tax Expertise
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 on your behalf.
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 each form line-by-line and see firsthand all of the calculations and considerations your refund requires.
Disadvantages of Paper Filing
There are lots of drawbacks to paper filing which make the process riskier and more taxing than e-filing.
Increases Chances of Errors
Data transcribers in the IRS must manually input taxpayer information for every paper return they get. Because of this, it might lead to 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, gathering 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 mistakes.
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 return submission when you file by paper:
- Make sure your name and Social Security number are on each page, both front and back.
Double-check your address. 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 right IRS service center, as the address can change based 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 right 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 think 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.
There are particular requirements for e-filing or paper filing should 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 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 the 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 professional or participating in filing assistance programs.