E-Filing vs. Paper Filing

Tax season is on the back-end stretch. Well, as long as you aren’t planning on filing for an extension.

If you still haven’t filed your taxes for the 2021 year, let’s discuss the pros and cons of e-filing vs. paper filing.

E-FILING

E-filing is safer, faster, and usually more convenient. The e-file option has been around since 1986 and now processes over 160 million returns. Typically, e-filing pros outweigh paper filing pros and e-filing cons.

PROS

1. Safety: E-filing is more secure than paper filing because the return and all of your confidential information is directly transferred to the IRS system.
2. Instant Confirmation: Electronic filing gives you instant confirmation that the IRS received your return. Also, it gives you instant rejection if there’s an error on your return along with what to do to fix it.
3. Quicker Processing: E-filed returns are processed way sooner because the IRS doesn’t have to sort and record your tax return. Especially this tax season, the IRS is predicting major delays in tax return processing particularly for paper returns. Head here to read the news release.
4. Less Room for Error: We’re all human, and I think we can all admit that we’re not perfect. E-filing lowers the risk for mistakes since IRS employees do not have to manually enter your tax information into the system. It’s automatically transferred into the IRS system.
5. IRS Free File: The IRS offers a free file program for you to electronically file. Find out if you qualify!

CONS

1. Fees: If you have a complicated return and are self-preparing through online tax software you may have to pay fees that go beyond the basic filing fees.
2. Can’t Attach Certain Files: If you have a rare tax situation, and need to submit certain backup to the IRS, it may be harder to do so with e-filing. As only certain forms can be attached. Check the attachments out here!

PAPER

Paper filing is riskier and more demanding than e-filing.

PROS

1. Rare Filing Situations: Paper filing allows you to submit images or PDFs to the IRS that wouldn’t normally be e-filed or an e-file attachment.
2. Personal Education: Filing a paper return forces you to see first-hand the calculations and forms it takes to complete your tax return. Although I am all for every taxpayer knowing what it takes to file a return, I don’t think this is a good enough pro to justify paper filing. You can always complete a hand “practice” return then still e-file your actual tax return.

CONS

1. Higher Risk of Error: Again, IRS employees are not robots they are human. Which means when you paper file your return they have to manually enter line-by-line your tax return, and this means a higher risk for errors to be made.
2. Longer Processing: Paper filing takes way longer to process than an e-filed return does. IRS employees have to manually enter your tax information once they finally open your mailed in return. Which can be a length of time in itself. Head here to see how behind they are on mail.
3. Manual Signature: If you’ve been filing a paper return for several years, this one may see obvious. But to new taxpayers this step is really easy to forget and can cause even longer delays. The IRS will not accept a return that isn’t signed.
4. Overwhelming: If you are trying to paper file, there are several necessary forms that need to be submitted with your return. When e-filing you may not even realize all the forms that get submitted with your tax return.

As you can see, e-filing beats paper filing by a long shot. If you still aren’t convinced to e-file, that is fine. You should do what makes you feel comfortable – it is your sensitive information after all – however, you should be aware of all the cons that come with paper filing. Because paper filing can cause major headaches down the road.

Stay informed this tax season with tax tips from the Better Than Yesterday blog!

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