5 Key Benefits That Make E-Filing the Best Choice Over Paper Filing for 1099 Forms!

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Tax season is in full swing, and businesses are busy wrapping up their 1099 filings. For those opting for paper filing, February 28 marks the IRS deadline for most 1099 forms, while those choosing to e-file have until March 31. This difference alone highlights a key advantage of e-filing—but it’s far from the only one.

While paper filing may seem familiar, it comes with unnecessary hassles—printing, mailing, and manual tracking—not to mention the potential for errors. E-filing, on the other hand, is faster, more accurate, and keeps your business in compliance without the extra paperwork.

In this blog, we’ll explore five key benefits that make e-filing the smarter choice for 1099 forms and how TaxBandits makes the process even easier.

Let’s dive in!

IRS E-filing Mandate for 1099 Forms

Before we dive into the benefits of e-filing, it’s important to note that for many businesses, it’s not just the better choice—it’s a requirement. The IRS has specific e-filing mandates in place to improve efficiency, accuracy, and compliance.

Understanding these requirements will help ensure your business meets its obligations and avoids potential penalties. Let’s take a closer look at why the IRS has made e-filing mandatory for certain filers and what it means for you.

• Previous Requirements: Until the 2022 tax year, businesses must e-file if you file 250 or more 1099 forms. This threshold allowed smaller businesses with fewer filings to opt for traditional paper filing without facing penalties for non-compliance. However, this requirement has evolved to adapt to the growing volume of information returns processed by the IRS.

• New E-Filing Requirement: Starting with the 2023 tax year, the IRS lowered the mandatory e-filing threshold. If a business must file 10 or more 1099 forms or any other information returns, it must do so electronically. This change reflects the IRS’s commitment to improving the efficiency of the tax filing process and ensuring accurate data reporting.

The IRS processes nearly 4 billion information returns annually, a figure that is projected to rise to 5 billion by 2028. This dramatic increase in the volume of returns has prompted the IRS to implement the e-filing mandate. By encouraging more businesses to e-file, the IRS aims to streamline processing information returns, reduce errors, and enhance overall compliance.

Why E-Filing 1099 Forms is the Better Choice?

Now that we’ve covered the IRS e-filing requirements let’s talk about what makes e-filing the preferred method—not just for compliance, but for efficiency and accuracy.

Here are the key benefits of e-filing your 1099 forms:

1. Minimizes Time Spent on Filing

E-filing 1099 forms eliminates the time-consuming steps involved in paper filing. Instead of printing, organizing, and mailing paper forms—followed by waiting for IRS confirmation—you can complete the process in minutes with electronic filing.

With e-filing, everything is handled digitally, allowing you to complete, review, and submit forms quickly. This not only saves time but also reduces administrative workload, so you can focus on running your business instead of managing paperwork. 

2. More Accurate Submissions

Paper filing comes with a higher risk of mistakes—whether it’s a misplaced form, incorrect data entry, or missing information. Errors like these can lead to IRS rejections, corrections, or even penalties.

E-filing minimizes these risks by incorporating built-in validation tools that flag common mistakes before submission. These checks help ensure that your 1099 forms meet IRS requirements, reducing the need for corrections and giving you confidence that your filings are accurate the first time.

3. Faster IRS Processing & Instant Confirmation

One of the biggest advantages of e-filing is the immediate confirmation you receive upon submission. With paper filing, businesses must wait for the IRS to manually process mailed forms, which can take weeks—and during that time, there’s no way to know if your forms were received, accepted, or if corrections are needed.

E-filing speeds up this process significantly. Once your forms are submitted electronically, you receive real-time status updates. If the IRS accepts your forms, you can move forward with confidence. If there’s an issue, you’ll know right away, allowing you to address it promptly rather than waiting for the IRS to notify you. This quick turnaround helps prevent missed deadlines and reduces the risk of non-compliance.

4. Easy Corrections & Convenient Recordkeeping

Mistakes happen, but with paper filing, fixing an error means printing a new form, mailing a correction, and waiting for the IRS to process it all over again—which takes time and increases the risk of missing deadlines. E-filing simplifies this process by allowing for quicker corrections. If an error is found, you can submit a correction electronically and receive confirmation when it’s processed. 

Additionally, recordkeeping is much more convenient with e-filing. Instead of managing stacks of paper or searching for past filings, your forms are securely stored and easily accessible online whenever you need them. Whether you’re retrieving past records for compliance, audits, or future reference, e-filing ensures your documents are always at your fingertips.

5. Enhanced Security & Data Protection

Filing 1099 forms involves handling sensitive business and financial data, including Social Security numbers and payment amounts. With paper filing, physical documents can be lost in the mail, misplaced, or even stolen, putting confidential information at risk.

E-filing provides a more secure alternative by encrypting your data during transmission. This ensures that information is safely sent to the IRS without the vulnerabilities associated with mailing paper forms. 

Make E-Filing Even Easier with TaxBandits

By now, it’s clear that e-filing 1099 forms is the smarter choice—offering faster processing, better accuracy, cost savings, and compliance benefits. But choosing the right e-file provider can make all the difference.

That’s where TaxBandits comes in. As an IRS-authorized e-file provider, TaxBandits simplifies every step of the process, ensuring you can file 1099 and W-2 forms quickly, accurately, and securely. From built-in validation checks to recipient copy distribution and seamless integrations, TaxBandits takes the hassle out of e-filing, making compliance easier than ever.

Here’s how TaxBandits enhances your 1099 e-filing experience:

• Intuitive Platform Designed for Quick Filing: Our platform lets you quickly and securely file Form 1099 online, ensuring accurate submissions directly to the IRS and state agencies. With bulk upload options and integrations with accounting software such as FreshBooks, Xero, Zoho Books, and QuickBooks, TaxBandits saves you valuable time, reducing manual effort and filing errors. In addition, with BanditAI, you get instant assistance at every step, so you can resolve questions on the spot and keep the process moving.

• Ensure Accuracy with TaxBandits Built-in Validation:  With TaxBandits, you can eliminate the risks of errors using our advanced validation tools. Our platform automatically checks your forms for common mistakes and missing details before submission, ensuring compliance with IRS requirements. In addition, we offer various data validation services such as TIN Matching, USPS Address Validation, and IRIS Business Validation that ensure that the 1099 forms are validated and error-free forms are transmitted.

• Faster IRS Processing & Real-Time Updates: When you file with TaxBandits, your 1099 forms are securely transmitted to the IRS and state agencies for faster processing. As one of the first providers to obtain TCC for the IRIS e-file system, TaxBandits facilitates quicker processing of your 1099 forms, even during peak deadlines. In addition, you can receive instant status updates regarding the IRS status of your forms via email instead of waiting weeks for paper processing. 

• Easy Corrections & Accessible Recordkeeping: TaxBandits makes corrections simple, ensuring that any errors can be addressed quickly and efficiently. If an issue is found, you can submit corrections electronically without the need to reprint and mail forms, receive IRS updates in real-time, allow you to fix issues before deadlines, and access your filing history anytime with secure digital records. 
  Instead of searching through stacks of paper, your 1099 records are securely stored and easily accessible whenever you need them.
  
• Commitment to Data Security: As a SOC 2-certified provider, TaxBandits strongly emphasizes data security, ensuring that sensitive business and taxpayer information is well protected. Our SOC 2 certification reflects our commitment to meeting strict compliance standards related to data security and privacy. We continuously evaluate our security measures to ensure alignment with industry regulations, providing clients with confidence that best practices manage their information.

Get Started with TaxBandits Today

TaxBandits provides a faster, more accurate, and secure way to file your 1099s. E-file today and simplify your tax season with a platform designed to make compliance effortless.