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 generally 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
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 though and, as of 2018, approximately 90% of taxpayers e-filed their yields.
The biggest benefit 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’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 more secure than paper filing, according to the IRS, because the return, together with all 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 does not need to sort or transcribe your tax return at its service center.
Less Human Error
There’s a lower chance that the IRS will make a mistake when calculating your return because IRS employees don’t have to manually enter your return line-by-line to its system.
You Do Not Have to Use a Tax Prep Program
You don’t have to use a costly tax preparation program to e-file your taxes–if you’re tax savvy, have a very simple situation, and are prepared 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 guidance is provided. And if your adjusted gross income (AGI) is less than $72,000, you may be better off with one of the IRS’ many free-file affiliates.
E-filing comes with some potential headaches, too.
While there are tax prep tools that 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.
Vulnerable to Outages
Glitches are always possible when you’re using the net. In 2020, TurboTax’s site experienced at least seven outages between April 15 and April 17. Additionally, your online service provider may face outages that could hamper your filing attempt.
Doesn’t Allow for Certain Filing Situations
Though e-filing supports most tax situations, there are certain situations it doesn’t support. By way of instance, you can not file a return for somebody who passed away, you can’t attach pictures 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 beneficial in some specific scenarios that e-filing cannot accommodate.
You’ve Got a Rare Filing Situation
By way of example, if you will need to prepare a tax return for somebody who passed away, you must file a paper return. Also, paper filing lets you print and submit pictures or PDFs to supplement your tax return.
You Want 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 ever telling you which forms it’s filing for your benefit.
You may 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 lots of drawbacks to paper filing that make the procedure riskier and more taxing than e-filing.
Increases Odds 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 may have to fix via an amended return.
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 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 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.
Tips for Paper Filing
You can do a few things to streamline your yield entry when you file :
- Make sure that your name and Social Security number are on every page, both back and front.
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 perfect 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 correct address.
Get an automatic extension if you’re mailing your return near 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 could be subject to penalties and interest.
The IRS provides a list of acceptable filing options on its 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’re eligible. There are particular 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 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 website 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 professional or participating in filing assistance programs.