Over 98 million people electronically filed their taxes in 2010, but 46 million still use a paper return, according to the Internal Revenue Service. The IRS often says E-File is superior to paper mailing in every way, but mailing a tax return could be the best option in a few cases.
Benefits of E-File
E-File tax returns get to the IRS in one to two days and result in a refund within two weeks, while a paper return has an average turnaround of about six weeks, according to Intuit. You can also have the IRS put your refund directly into up to three bank accounts or U.S. savings bonds. Using direct deposit and the standard deductions cut turnaround time to 10 days. Also, E-File returns are about 20 times more accurate than paper returns and are easier to correct.
Mailing Your Return
Mailing a return could lower your risk of an audit, suggests John Giacchetti, a New York-licensed CPA. The IRS does not release statistics on the audit rates of paper vs. E-File, but the IRS cannot look at all of the information on a mailed return, whereas it is extremely quick to pull up a return filed electronically. Also, E-File returns free up resources at the IRS to hire even more auditors.
Most taxpayers qualify for free E-File tax preparation and filing as long as they earn less than $58,000 (as of 2011). E-File could end up costing you more than a paper mailing--especially if you prepare your own taxes--when you earn more than this threshold or have a complicated return, such as one that includes Schedule C for business income.
If you E-File early, you can adjust your withholding tax faster, so you receive more money in your pay check, rather than a very large return at the end of the year, suggests Intuit. This essentially works out like an interest-free loan from the government. Also, E-File returns may reduce your stress, especially if you are close to the April 15 filing date, because you do not have to scramble to get to the post office.
- Form 1040 Tax Forms image by Viola Joyner from Fotolia.com