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Electronic Filing vs Paper Filing

The two ways of sending your tax return to the IRS are through electronic filing or paper filing. Electronic filing is preferred over paper filing because it’s simple, safe and fast. However, taxpayers that are not computer savvy should use paper filing to avoid online scammers.

efilingFor the 2015 tax season, more than 128 million tax returns were efiled, which is about 91% of the returns filed when the assessment was made in October, 2015. This is a big leap from 2010 when 69.76% of the returns were e-filed.

 

Benefits of E-Filing

Faster: Sending your return in via e-file takes seconds. Moreover, there is no need to print a form and mail it. Due to the ease of e-filing, more and more taxpayers are using it to file their return. Tax return preparers also make use of electronic filing.
Accurate: The IRS encourages taxpayers to use e-file because it is easier to process and the rate of errors is less, when compared to paper filing. The IRS Free File service provides both free and paid tax preparation software for taxpayers.

For paper returns, the IRS takes more time to process. Furthermore, taxpayers need to prepare their returns themselves or use the service of a return preparer. The majority of return preparers, however, use electronic filing. For free tax assistance in return preparation, qualifying taxpayers can use the IRS’ Volunteer Income Tax Assistance (VITA) during the tax season.

Faster Refund: Electronically filed tax returns get processed faster than paper refunds. If the return is electronically filed, your tax refund usually reaches you within 21 days from the day of filing. Moreover, you can check the status of your refund on IRS’ ‘Where’s My Refund?’ service within 24 hours after e-filing your return.

For paper returns, the refund takes more than 6 weeks from the date it’s sent in, The status of the refund on ‘Where’s My Refund?’ can be checked after 4 weeks from the mailing of the paper return.

Limitations of E-Filing

Forms Not Supported: The IRS does not allow electronic filing of certain forms and schedules. For example, if you are married filing separately and live in a community property state, then you are required to file a paper return. Certain tax forms and schedules cannot be e-filed because the IRS e-file systems do not support them.

Security Threat: Due to the active presence of tax scammers on the Internet, sending a tax return electronically can risky for taxpayers who are unaware of current fraud trends.

Unprotected computers can easily be hacked by sophisticated online scammers to extract personal information. In this sense, paper filing may be a safer option, though it takes more effort and time.