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 submitting have their pros and cons. E-filing is safe, faster, and more convenient than paper filing, but filing by email can be cheaper, although it takes the IRS longer to process refunds.
The Advantages of E-Filing
E-filing was first 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 the new technology at the time. The new filing method eventually caught on though and, as of 2018, roughly 90% of taxpayers e-filed their returns.
The biggest advantage 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’ll receive a rejection notice (usually within 24-48 hours), and the note 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, together with all your sensitive data, is transmitted directly to the IRS computer system.
Your refund is 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.
Less Human Error
There’s a lower 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 Don’t Have to Use a Tax Prep Program
You don’t need to use a costly tax preparation program to e-file your taxes–if you are tax savvy, have a simple situation, and are willing to understand, you can fill tax forms in directly using 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 might be better off using one of the IRS’ many free-file affiliates.
The Disadvantages of E-Filing
When there are tax prep 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 sort of features you want.
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. Also, 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 does not support. For example, you can not file a return for somebody who passed away, you can’t attach images or PDFs to your return, nor will you file 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 cannot accommodate.
You’ve Got a Rare Filing Situation
For instance, 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 images or PDFs to supplement your own tax return.
You Want 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 telling you which forms it is filing for your benefit.
You may fill out every form line-by-line and see first-hand all of the calculations and considerations 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 in the IRS must manually enter taxpayer information for every paper return they receive. As a result of this, it might result in errors that you may have to fix via 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 result in 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.
You can do a few things to streamline your return entry when you file :
- Make sure your name and Social Security number are on each page, both back and front.
Double-check your address. 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 right IRS service center, since 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 you can find the correct address.
Get an automatic extension if you are mailing your return near 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 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.
There are specific requirements for e-filing or paper filing if you use these programs.
In the unlikely event 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 copy. 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 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 overwhelming.
- Alternatives to filing taxes in your include hiring a tax pro or participating in filing assistance programs.