The Benefits of Filing Information Returns Electronically: Saving Time and Resources

The Benefits of Filing Information Returns Electronically: Saving Time and Resources

As technology continues to advance, the IRS has made it easier for taxpayers to file their information returns electronically. Filing information returns electronically has numerous benefits such as saving time and resources. In this article, we will delve into the benefits of filing information returns electronically and how it can impact your business.

What Are Information Returns?

Information returns report payments made to individuals and businesses during the year by businesses and government agencies. These payments can include income, dividends, interest, and other payments. Information returns must be filed by the person or entity that made the payment, either by paper or electronically, with the IRS and the recipient of the payment.

Why File Information Returns Electronically?

There are several benefits to filing information returns electronically:

1. Time-Saving: Electronic filing not only reduces the amount of time it takes to file, but also allows the filer to submit returns 24/7. This eliminates the need to wait in long lines to file in person or wait for paper returns to be processed, allowing for a more efficient tax season.
2. Reduced Errors: Electronically filing information returns significantly reduces the chance of errors because the data is automatically validated and checked for consistency, reducing the need for correction requests and increasing accuracy.
3. Cost-Efficient: Electronic filing eliminates the need for paper forms and postage, which can save businesses a significant amount of money each year.
4. Quicker Processing: Electronic filing is generally processed more quickly than paper returns, meaning refunds are issued faster.
5. More Secure: Electronically filing information returns is more secure than filing paper returns as electronic returns are encrypted and stored securely.

Examples of Electronic Filing

There are several methods of electronic filing, including:

1. Uploading: Taxpayers can upload their information returns through the IRS’ FIRE system (Filing Information Returns Electronically). This is suitable for businesses that file multiple forms and returns.
2. Online: The IRS offers online filing with fillable forms, suitable for individuals or small businesses who are filing a small number of forms.
3. Through a Third-Party: Taxpayers can use a third-party provider to file their information returns. This is suitable for businesses that don’t have the resources to file the forms in-house, or individuals who prefer to use an intermediary.

Conclusion

Filing information returns electronically has numerous benefits and is becoming increasingly popular for businesses and individuals to use. It’s important to ensure that you are filing correctly and on time, to avoid any penalties or fines. Using the IRS’ FIRE system or a third-party provider can help streamline the process and ensure the correct filings are submitted promptly. Remember, electronic filing saves businesses time, money and resources, enabling them to focus on growing their business instead of spending hours on paperwork.