Find Out if You Should e-File or Paper File
The U.S tax season has started and will be on till the 17th of April 2018. It is important that tax payers ensure that the meet up with the deadline to avoid the likely penalties that would come after the deadline. There are several methods of filing your tax returns which every tax return filer should be aware of. Two main methods of filing tax return is the e-File option and the paper filing option.
E-file method is one that is done over the internet. It does not need printing out tax forms and filling them with pen. E-file option involve the use of tax preparation software on a PC to fill out the electronic forms. It works in such a way that tax payers can always transmit their tax returns from anywhere after filling.
The paper file option involves printing out tax forms and filling them out using a pen. The difference is that paper file option is not transmitted to IRS electronically rather it is mailed to IRS.
Pros and Cons about e-Filing
E-filing is simply the transmission of tax return over the internet to the United States Internal Revenue Service without actually submitting any paper document. It involves using tax preparation that has already been pre-approved by the IRS to transmit tax returns. It is important to note that some of these tax preparation software could be in form of a standalone application or web application that works with the internet. A lot of tax professionals are known to use tax software built by major software vendors.
Pros: e-filing has a lot of advantages over the traditional paper filing method as seen below:
- Tax can be filed from just Anywhere: It does not really matter where you are, with e-filing, you can fill out your forms electronically and transmit to the IRS. You can file your tax return from your home, office, financial institution, libraries, work place or even a retail outlet.
- It is faster: Using e-filing method makes it faster to file tax returns because it does not involve mailing the document rather your tax return is sent to IRS using just a click of a button. Since sending your tax return is faster with e-filing option, it then means that tax payers would also expected a faster tax refund.
- Accuracy: There is an increased accuracy with e-filing option when compared to the traditional paper method. The reason for this is simple, tax data is directly transmitted to the computers and servers of the IRS and this is known to reduce input and keying in data errors.
- Double filing: With the e-filing method, tax payers can file both state and federal tax return simultaneously. The e-filing platform is designed to accommodate tax payers who wish to file both tax return simultaneously. The advantage of this is that it saves a whole lot of time for the tax payer.
- Improved efficiency: E-filing is very efficient in the sense that you do not need any postal service to deliver your return. Besides, it eliminates the possibility of errors because the system helps you calculate the figures you input to ensure that they are correct. If there are errors, the system helps correct them before transmitting them to IRS.
- Learning Curve: Navigating through the e-filing platform may not be easy for a lot of people especially if they are not computer savvy. It may require a period of learning and assistance may be required especially for people using it for the first time. However, it may present less a challenge with time as you get used to it.
- Costly： There is a possibility that you may have to pay a fee for using the e-filing method. Fortunately, there are a lot of programs that allows taxpayers to file their tax return for free but this may not be the case for a lot of state tax returns. It is important to note that most services will charge some extra fee to file state tax returns but it may not cost a lot.
- Security： Security is a big issue with e-filing. Your computer could be hacked and information stolen. However, using PDF editors like PDFelement would minimize the risks.
Pros and Cons about Paper File
Paper filing system is the traditional type of filing tax returns before the advent of electronic filing. It is simply the filing out of tax forms offline using writing materials and sending it to the IRS using postal services.
- Easy to use: Here, having computer skills is not necessary. Everybody can download, print and fill out the tax forms without actually calling for help.
- Lower audit risk: It is believed that paper filing has a lower audit risk when compared to electronic filing method.
- Processing time is longer: With paper filing, tax payers should expect a longer processing time up to 6 weeks
- Cannot file at the last minutes: Tax payers cannot wait till the last minute to file because they would miss the deadline since it requires the use of postal service to get to IRS.
- Not efficient: A lot of paper and envelope are wasted on this coupled with the fact that preparation time is longer.
The truth is that using the e-filing method or the paper method is strictly by choice of the tax payer. There is actually no right or wrong system. It will depend on the tax payer’s situation and how comfortable they are with any of the methods.
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