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 advantages and disadvantages. 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 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 moment. The new filing method eventually caught on though and, as of 2018, approximately 90% of taxpayers e-filed their yields.
The biggest benefit of electronic filing is that you’ll 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 fix your tax return.
E-filing is 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 faster because e-filing means the IRS does not have to sort or transcribe your tax return in its service center.
There is a lesser chance that the IRS will make a error when processing your return because IRS employees don’t need to manually put in your return line-by-line into 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 are 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 need to 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.
E-filing comes with some potential headaches, too.
When there are tax preparation 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 basic filing. Fees can exceed $100, depending on which sort of features you want.
Glitches are always possible once you’re using the net. In 2020, TurboTax’s site experienced at least seven outages between April 15 and April 17. Also, 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 scenarios, there are certain situations it does not support. By way of example, you can’t file a return for someone who passed away, you can not attach images 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 helpful in certain scenarios that e-filing can’t accommodate.
You Have a Rare Filing Situation
E-filing can only do so much. For example, if you will need to prepare a tax return for someone 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 answers to fill out forms without telling you which forms it’s filing on your behalf.
If you want 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 can fill out every form line-by-line and see first-hand all of the calculations and factors your refund requires.
Disadvantages of Paper Filing
There are several drawbacks to paper filing which make the procedure riskier and more taxing than e-filing.
Increases Odds of Errors
Data transcribers at the IRS must manually input taxpayer information for every paper return they receive. As a result of this, it could result in errors that you might need to fix via an amended return.
For filers who attempt 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 might 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, leading to 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 yield submission when you file by paper:
- Make sure your name and Social Security number are on each page, both back and front.
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, since the address can change based on which state you’re in, and whether you’re including payment with your return. The IRS provides a state-by-state list online so 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. 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 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.
Use the Volunteer Income Tax Assistance Program, or the Tax Counseling for the Elderly program, if you are eligible. 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 data, your e-filed return will be rejected by the IRS as a duplicate. You have to file a paper tax return in this situation and mail it in with Form 14039, the”Identity Theft Affidavit,” notifying the IRS of this issue.
- E-filing is quickly and provides several free options
- Internet 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 professional or engaging in filing aid programs.