Your Guide to US Tax Filing Options
The bottom line is there are only two ways to submit your annual tax return – online by e-file or the traditional method of mailing it on paper.
This guide will explore the difference between online tax filing and the paper route, to help you decide what suits you best.
Paper Filing
Filing your tax return on paper is generally cheaper and it’s a good choice if you have a fairly simple tax return.
The downside is that because the IRS then has to re-type every paper return it receives, your return will take longer to process, including any refunds you’re owed. So, if you have a more complex tax return, e-filing will be better for you.
In certain cases however, you won’t be eligible for e-filing – you will need to file by paper if you’re:
· Married and living in a community property state, but filing a separate return.
· Submitting a tax form that can’t be electronically filed (for example, a Multiple Support Agreement).
· Claiming a dependent that has already been claimed by someone else.
· Filing before the e-file window begins (January 15) or after it ends (October 15).
Here are some tips to help your paper filing go smoothly:
· Make sure your address is absolutely correct, since the IRS will send your refund and any notices here. If you’re planning to move, it’s a good idea to either use a PO Box or some other permanent address.
· Write your name and Social Security Number on every page, both front and back.
· Check the math – calculation errors are the number one reason why the IRS changes a tax return.
· Make sure you mail your return to the right Service Center.
· Send your tax payment with your tax return and ensure the payment gets to the IRS by April 15th to avoid any late payment penalties.
· You can make your payment by web pay, credit card or by mailing a check.
· If you’re mailing your return close to April 15th, get an automatic extension to prevent penalties if the mail is late.
E-filing
Online tax filing is actually faster and more secure than paper filing. In fact, the IRS prefers e-filing as it makes their job easier and saves money. Since the tax year began in 2010, they have stopped mailing Form 1040, Schedule A and other tax-related forms to tax payers as it saves them around $10 million per year.
To e-file your return you can have your taxes done by a tax preparer or prepare them yourself using tax software. Once you get started, you’ll find it offers many important benefits to make your life easier:
· Within 24hrs of e-filing, you will receive a confirmation that the IRS has received your tax return and begun processing it, or a rejection notice if there’s a problem with guidance on how to fix it. This really speeds things up and gives you peace of mind that you’re on the right path.
· Since your data will go directly into the IRS system instead of them having to re-type your tax return as with paper filing, there’s much less chance of human error and the process is much faster.
· Some people are afraid that their personal data and banking details will be at risk if they file online, but in fact it’s more secure than mailing a paper tax return – an e-filed return is encrypted to prevent access to your data as it moves between your tax software and the IRS. You can also add to your sense of security by visiting tax software websites and checking their privacy policy plus support pages to learn about the technology they use for secure online tax filing.
· Income tax software does all the tax calculations and then double-checks the numbers, whereas with paper filing there’s a chance of making errors when you transfer your calculations to the tax forms.
· Your tax software will conveniently tell you when your refund is being processed and when to expect a deposit.
Conclusion
For those who’ve never tried it, online tax filing might seem difficult as it involves using software. But the fact is it’s totally easy to use, reduces the chance of errors and speeds up Uncle Sam’s ability to process both your return and any refunds owed to you. Even the IRS is saying that paper filing is obsolete, so unless you’re not eligible to file electronically, I strongly advise you to try it.
About the Author: Bob Goren is an independent advisor for online tax filing in the US.
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