I am a licensed CPA in both New York and Massachusetts, and a member of the American Institute of Certified Public Accountants.
E-filing vs. Paper Filing
In this era of everything digital, it seems surprising that anyone still struggles with the choice of filing their tax return electronically or by paper. E-file is simplified with the IRS Free File program which is reasonably priced tax software to prepare and filing yourself, as well as, for tax professionals preparing and filing returns electronically.
Obviously, there are a few reasons that you may need to paper file or print and mail your return. These are not typical returns or reasons; most taxpayers do not fall into this category. But many people still question which is the better way to file your tax return. Honestly, there are some pros and cons for each. Let us explore the reasons to allow you to make an informed decision about your filing method.
As of May 2016, 123,737,000 tax returns were e-filed last year, that is 91% of returns filed. E-filing has increased annually since 2001, when only 30% of filers took advantage of it. The IRS has continuously encouraged Americans to file electronically because it benefits them: reduces labor costs, reduces error correction, saves physical resources including storage of paper returns.
Pros to you as a taxpayer
- Saves time
- Saves money
- Saves paper & ink
- May reduce stress
- Acceptance notifications within 24 hours
Cons to you as a taxpayer
- Increases audit risk-this is not proven but believed by many
- Nothing replaces paper & ink
- You may not be allowed to e-file-certain tax situations that require paper filing
- Can’t file until the program opens in mid-January
Not everyone will remember good old fashion tax forms being mailed to them, or having to visit your Post Office or Library to find the forms that you needed for free. That is pretty old school, and may show my age a bit. For those of us who have been filing our own returns for as long as we have filed a return, that was what you had to do. If you moved during the year your tax booklet and forms may not come to your new address, if you needed an uncommon form, or you simply wanted a spare to practice or correct a mistake you had to visit the local post office or library to find the forms and/or instructions you required. Even today there are reasons some taxpayers must paper file, and reasons why some people just stay old school- but now you can download and print any forms you need and not have to chase them down!
Pros to paper filing
- You just like paper and pen
- You believe it is a lower audit risk
- You are not tech savvy
Cons to paper filing
- Longer processing time-if you are awaiting a refund which can take up to 6 weeks
- Cannot wait until the last minute to file
- Preparation time is much longer
- Killing trees- wasting unnecessary paper and envelopes
It really is a personal choice, unless you are one of the few that are required for some reason to paper file. The IRS has pushed for everyone to e-file and they have simplified it enough so that most people feel confident enough to try it. With over 90% of all returns e-filed last year, it seems that it will soon be mandated, unless you have special circumstances, so it could be a wise choice to become familiar with e-filing, even if you do not choose it this year.
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