When you file your taxes, you’ve got two options for submitting your return with the Internal Revenue Service (IRS): electronically or by mail.
Both methods of submitting have their advantages and disadvantages. E-filing is safe, faster, and 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 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 moment. The new filing method eventually caught on however and, as of 2018, roughly 90% of taxpayers e-filed their returns.
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’ll be given 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, 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 quicker because e-filing means the IRS does not have to sort or transcribe your tax return at its service center.
There is a lower chance that the IRS will make a mistake 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 an expensive tax preparation program to e-file your taxes–if you’re tax savvy, have a simple situation, and are prepared to learn, 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 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
While there are tax preparation tools which 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.
Vulnerable to Outages
Glitches are always possible once you’re using the net. 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 effort.
Does Not 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 pictures 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 some specific scenarios that e-filing can’t accommodate.
You’ve Got a Rare Filing Situation
E-filing can only do so much. For 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 own tax return.
You Want to Build Your Tax Experience
Many online tax prep tools automate the filing process by asking you questions and using your answers to complete forms without ever telling you which forms it is filing on your behalf.
You can fill out each form line-by-line and see first-hand all of the calculations and factors your refund requires.
There are several drawbacks to paper filing that make the procedure riskier and more taxing than e-filing.
Increases Chances 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 lead to errors that you may need to fix through an amended return.
Overwhelming for Beginners
For filers who attempt 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 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.
You can do a few things to streamline your yield submission when you file :
- Make sure your name and Social Security number are on every page, both back and front.
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, as the address can change depending 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 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 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 website, which include the following options:
- Hire a tax professional to prepare your return.
There are specific requirements for e-filing or paper filing should you use one of these programs.
In the unlikely event 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 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 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 engaging in filing assistance programs.