Should I File a Paper Tax Return or Go Paperless?


Posted 2 years ago in Small Business Tips
by Jennifer Diffley

Choosing between filing your taxes electronically or mailing them in manually may seem like you’re just selecting the right torture device, but we’re here to reduce the pain of tax season. And, believe it or not, your filing method can have an impact on how smoothly your tax season goes.

Paper tax filing method

Sending your tax return in manually is right for you if:

  • You really want to learn all about taxes.

     

Seeing all the information presented in front of you at once is a great way to learn the process. It’s an investment in yourself.

  • You like visibility.

When you submit your tax information electronically, you’re trusting software to crunch the numbers for you. When you fill out the numbers by hand, you maintain control over the results.

  • You don’t want to lose money.

As tax season approaches, tax preparation software companies start advertising free or cheap filing, but be careful: they may let you file federal taxes for free, but will charge for doing your state taxes. Tax prep companies need to make money somehow, and they do that by skimming off money from your return or charging you for filing. If you want the truly free option, stick with the paper method.

E-filing your taxes

Using software (online or not) to file is right for you if:

  • You’re in a hurry.

Electronic filing means no waiting for the mailman to take your return to the IRS. Plus, there’s no chance of it getting lost in the mail. Submission is as fast as your internet connection.

  • You want your money.

Getting your refund only takes about 21 days for electronic filing, whereas sending it through the mail means you’ll be waiting about 6 weeks.

  • Your life is simple.

If you’re an individual with a single job, then electronic filing makes sense. However, if you own a small business or you have multiple jobs with complicated deductions, software most likely won’t cut it. If you begin filing your return electronically and realize that it’s not robust enough to handle your income and businesses, you’ll probably need to see a CPA.

  • You want instant feedback.

Making a mistake on your tax return can be financially devastating. Don’t believe us? Ask Mary J. Blige (she owes well over $3 million in back taxes). When you file electronically, you’ll be notified quickly if something is wrong with your return, which means you can fix the problem quickly and not be penalized.

What’s the best bet?

Online tax filing makes the most sense for the most people (plus, who can turn down faster money?), but if you’re a small business, avoid it and go with the free software route.

If you want total control over your taxes and want to figure out deductions that tax software may not catch, file your own paper return. You’ll have to wait a couple months to see your refund, but the power over your finances may be worth it.

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