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This question is about the IRS tax returns in the US. This question is neither opinion based nor is it about specific tax preparation software.
I am asking specifically if there are objective benefits of electronic submission (efile) of tax returns already prepared with software like turbotax, instead of just couriering the prepared tax returns?
I am not asking about the benefits of using software to calculate and PREPARE the tax returns.
Turbotax software for example offers an option to either let us print out the copies of the prepared returns and post them to the IRS ourselves or, to pay an extra charge (for e-submission of state tax returns), to submit the tax returns on our behalf. I am asking if there are any extra benefits to us, apart from the fact that we do not have to make our way to the post office, to letting turbo tax submit the tax returns?
Like lesser chances of audits, or whether it would be shown to IRS that the tax has been prepared by TurboTax instead of saying "self-prepared" as it shows when created with TurboTax and printed.
I am mainly concerned that despite of their privacy claims, that our most data would reside on the turbo tax servers for at least 7 years...

So if there are no major benefits, I am considering posting the printed copies of the returns prepared by TT software this time.

2 Answers 2

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Advantages of electronic submission are basically that you get acknowledgement the forms were received, they may get processed faster, they can't get lost in the mail, and it may let you more reliably heat the deadline if you're running late.

Most of which I don't consider worth paying much for. I habitually submit the federal returns electronically since that service is built into the base price of most tax software, but print and mail the state forms since I don't feel like paying extra to do that.

Flip a coin, pick what makes sense to you.

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  • Thx. I want to avoid the TT guys having my info. If they submit my federal returns they still have my info and files. So I wanted to know if our returns would have better validity in the eyes of the IRS ("prepared by TT") (or similar) if submitted by TT rather than if posted by us.
    – DashUS2023
    Oct 12, 2023 at 22:33
  • Nope. Just a data delivery service
    – keshlam
    Oct 12, 2023 at 23:29
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Turbo Tax is just trying to make money. E-Filing doesn't actually cost anything (at least in a sense that the IRS doesn't charge for that), and the infrastructure to efile is not all that complex or expensive in the grand scheme of things.

However, for the taxpayer efiling would provide significant benefits:

  • Speed of processing - efiled returns processed within days, 1-2 weeks tops. Paper filed returns are processed within 2-3 months
  • Errors - efiled returns are processed correctly as submitted. Paper-filed returns need to be manually transcribed into the IRS computers. That leads to various mistakes, missing numbers, mistyped numbers, forms lost in the process, etc.
  • Costs - if you're filing a paper return, you should be sending it with a USPS certified mail. E-File is free (unless your provider charges, like Turbo Tax).
  • More costs - if you're paper-filing Federal return, you'll need to paper-file State returns. I had to do paper filing (for specific reasons) last year, and my California package had to be shipped as a parcel because it was too big for a regular letter postage.
  • More errors - Similarly to Federal, State forms would also need to be transcribed. If you attached your Federal tax return to State (as you would in California) - so would that. You may end up with mismatches across all that and the IRS that may take a while to figure out.

As to the preparer, the IRS may suspect that your "self-prepared" forms were prepared by someone with a TT who's preparing returns for money using it. This has happened before. If you're efiling, it is less likely that the IRS would suspect the fraud, since the efiling path is traced electronically. Whether the mere "self-prepared" statement would trigger an audit? Probably not. But if the combination of concerns raises eyebrows with someone at the IRS - then it may happen. With a paper return you're guaranteed to have a human look at it, while with e-file it most likely won't be looked at by anyone ever.

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  • The main concern is that TT stores all my most private info on their servers. I have reason to strongly suspect that they are now using AI on our data. Was filing through TT the past few years but this year for this reason I am in two minds whether to just post the completed returns instead of submitting through TT. Cost: $49 extra to efile State through them. So that's not a saving over USPS.
    – DashUS2023
    Oct 12, 2023 at 23:54
  • @DashUS2023 "now using AI on our data" is a meaningless statement. If you're using a local copy of TT and store your return details locally, it is unlikely that they'll store a copy after efiling it, but you can check what they store and what their privacy policy with regards to it is, it's not a secret.
    – littleadv
    Oct 13, 2023 at 2:45
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    Like keshlam I efile Federal as included in the base price and print and mail state -- but my state (NJ) specifies barcoding on software-printed returns, so it processes without error and only 1-2 days delay. Oct 13, 2023 at 6:51
  • @littleadv I did read privacy policy. You also pls read: They very clearly state that they are going to store the returns. Also pls read the agreement at the start of TT install on PC: It CLEARLY states that they can and will check our credit history, share any of our data with their intuit group of companies for marketing and other purposes included. I will paste it here tomorrow properly. AI can be used to create profiles of users although for that part I do not (yet) have proof that they are doing so.
    – DashUS2023
    Oct 13, 2023 at 10:09
  • @DashUS2023 then don't use their products, what's the problem?
    – littleadv
    Oct 13, 2023 at 16:47

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