E-filing vs. Paper Filing: Which Is Right for You?

Many people tend to dislike filing their taxes for numerous reasons. Filing taxes is an activity that can be stressful and can sometimes even put the most accurate person in a state of dilemma. As times have changed, you now have the two modes in which you can file your taxes. These two ways are E-Filing and Paper-Filing.

In this article, we'll explore both methods, elaborating on their advantages and disadvantages, and provide tips on how to successfully navigate the tax filing process, whether you opt for the convenience of e-filing or the traditional route of paper filing.

What is paper filing?

Paper filing, which is the traditional way of filing tax, deals with filling out a physical tax return form. An example is the 1040, by hand or with the help of an authorized tax professional, and sending it to the IRS through traditional mail.

Advantages of Paper Filing

1.No Technology Dependency

With paper filing, you don’t require any special software or internet access. This option proves to be a more comfortable way for people who don’t have access to a computer or the Internet.

2.Saves Cost

Paper filing can help you save costs. This is because it doesn't involve you purchasing tax software or paying for an electronic filing service. You only need access to the necessary forms and postage and there you go.

3.Privacy

Some people prefer the privacy of paper filing because they are not sending their financial information electronically, thereby reducing the risk of identity theft and other fraudulent internet activities.

Disadvantages of Paper Filing

1.Processing Is Slow

The most significant disadvantage of paper filing is the slow processing time. Since the IRS processes paper returns manually, it can result in delays in getting your refunds or responses to inquiries quickly as compared to e-filing.

2.High Risk of Errors

Filling out paper forms by hand can increase the likelihood of you making errors, such as miscalculations, incomplete information, or grammatical errors. These errors can lead to delays and even IRS audits.

3.No Confirmation Receipt

Unlike e-filing, paper filers do not receive any confirmation of their submission immediately, this makes it difficult for them to track the status of their return.

Tips For Successful Paper Filing

1.Use Legible Handwriting

If you're filling out paper forms by hand, use legible handwriting as this helps reduce the chances of errors caused by misinterpretation. Take your time and write legibly.

2.Always Check the Address

Make sure you're sending your paper return to the correct IRS address. The address may be different depending on your location and the type of return you're filing.

3.Include All Necessary Documents

Double-check and check again that you've included all required documents, such as W-2s and supporting schedules, with your paper return.

4.Use Certified Mail

If you want to keep track of the delivery of your paper return and receive proof of receipt, think of sending it via certified mail with a return receipt requested.

Summing it up, in the great controversy of e-filing vs. paper-filing, the decision to choose any of the two largely depends on your preferences. As stated above, E-filing offers speed, accuracy, and security but may not be suitable for those uncomfortable with technology. On the other hand, paper filing provides a traditional, no technology-related option but comes with the setback of slower processing times and a higher risk of errors.

Regardless of the method you opt for, careful preparation and paying critical attention to all details are key tips to successfully file your taxes. Whether you opt for the convenience of e-filing or the familiarity of paper filing, organizing your documents, double-checking your information again, and keeping records are essential practices to ensure a smooth tax season.

Also, remember that irrespective of the method you choose, the IRS audit envelope is something you'd rather avoid. So, take your time, follow the guidelines, and file your taxes accurately to reduce the chances of receiving the IRS audit envelope.

What is E-filing?

E-filing, short for electronic filing, is a mode of submitting your tax returns to the IRS (Internal Revenue Service) through electronic means, this is normally done through specialized software or an authorized tax professional. Due to its convenience, it has become the favorite of most people as it saves time and it is very efficient.

Advantages of E-filing

1.Efficient and fast

One of the most important advantages of e-filing is its fastness. Your tax return is processed much faster when you submit it electronically. This means that you receive your refund sooner if that happens to be the case. With E-Filing the IRS can process returns within a matter of days, paper-filings on the other hand can take weeks.

2.Correctness

The E-filing software often comes with error checks and calculations that are in-built. With this, the chances of you making a mathematical error or missing information on your return can be minimized. This even goes further to help you prevent unnecessary audits or delays.

3.Receipt of Confirmation

As soon as you e-file, you will receive a confirmation receipt from the IRS acknowledging the receipt of your return. This will keep your mind at peace with the assurance that your receipt is there if anything goes wrong.

4.Safety

E-filing is by large considered safe. The data you send is encrypted during transmission, and most e-filing software providers employ robust security features to safeguard your sensitive information.

5.Direct Deposit of Refund

If you happen to expect a refund, e-filing allows you to choose the direct deposit option, which means your money is deposited directly into your preferred bank account. With this, there is no need to wait for days to receive a paper check in your mail.

Disadvantages of E-filing

1.Technology Dependent

E-filing is dependent on technology. This is mostly a worry for people who are not technologically inclined or have no limited access to a computer or internet.

2.Expensive

People looking for a simple tax return can opt for free e-filing options while people with a complex tax situation will have to acquire paid software or a professional to assist them. All these add to the cost of e-filing which sometimes makes it expensive.

3.Safety Concerns

Although e-filing is largely safe, there is always a small risk of data breaches or identity theft, which can be a worry for some individuals.

Tips for Successful E-filing

1.Select an Esteemed Software

If you opt for e-filing, choose an esteemed tax software or service provider. Ask questions and do complete research to ensure that the software you want to use is updated with the current requirements of the IRS.

2.Assemble All Your Documents

Before you start e-filing, assemble all the necessary documents you will need, including W-2s, 1099s, and any other important financial information.

3.Check Your Information as Many Times as You Can

Review your return again and again carefully before submitting it. Make sure all the information is accurate and up-to-date. Remember to sign electronically if required.

4.Save a Copy

Save a copy of your e-filed return and the confirmation receipts this is very necessary. It's essential to save and keep these records for at least three years. This is because the IRS might require it shortly.