Paper Tax Returns Decline as E-Filing Expands
Paper tax returns continue to decline as more taxpayers choose electronic filing. IRS data from the recent filing season shows digital submission now dominates how Americans file their taxes, while traditional paper filing continues to shrink as processing technology improves.
The shift away from paper tax returns has developed over several decades as electronic filing and tax preparation software became more widely available. Programs within the tax software industry and the IRS Free File program have helped millions of taxpayers file their tax returns online at no cost.
According to IRS projections, roughly 149 million electronic income tax return submissions were processed in 2024, accounting for about 93.5 percent of all returns received by the agency. By comparison, the IRS processed approximately 10.3 million paper filings that year.
Most individuals submit the Federal Form 1040, officially known as the US Individual Income Tax Return, through digital platforms. Variants such as Form 1040-SR for older taxpayers and amended filings using Form 1040-X are also commonly filed electronically. Supporting documents such as Form W-2 Wage and Tax Statement, Form W-4, Schedule 1, or Form W-9 can now be submitted electronically.
Processing time remains one of the biggest differences between paper returns and electronically filed returns. When taxpayers file electronically and select direct deposit, tax refunds often arrive within about 21 days.
Paper filing requires additional steps inside the IRS processing centers. Returns must pass through submission processing units where mailroom employees sort documents and prepare them for data extraction.
In many cases, staff must manually enter information from a scanned copy of the return into IRS systems. Although new scanning technology uses optical character recognition, machine-read tools, and 2-D barcoding, some returns still require manual transcription, which can lead to processing delays and transcription errors.
To reduce the paper backlog and improve the taxpayer experience, the IRS launched the Paperless Processing Initiative in 2023. The program aims to digitize incoming paper filings through scanning and automated data extraction.
Under the initiative, paper returns mailed to facilities such as the Kansas City campus are scanned, converting documents into digital records. This process helps IRS processing systems review returns electronically rather than relying solely on manual entry.
IRS officials say expanded digital submission and improved scanning technology could reduce storage costs, limit refund delays, and help close parts of the tax gap linked to processing inefficiencies.
Despite the growth of electronic filing, millions of taxpayers still choose to file by paper. Some individuals prefer traditional filing methods or lack reliable access to digital services.
Certain taxpayers, including US citizens living overseas, may submit documentation that cannot easily be transmitted electronically. Complex filings involving estimated tax adjustments, installment agreement request forms, or tax debt documentation may also require additional paperwork.
Organizations such as the Taxpayer Advocate Service, led by the National Taxpayer Advocate, assist taxpayers experiencing refund delays or processing issues related to paper returns.
Taxpayers who must file by paper should follow several steps to help prevent processing delays and ensure their return moves smoothly through the IRS.
Use the correct version of Form 1040 and attach supporting documents such as Form W-2 Wage and Tax Statement. If a payment is included, taxpayers may use a Payment Voucher, such as Form 1040-V.
Verify the correct mailing address, as paper returns are sent to specific IRS P.O. Box locations depending on the due dates for filing and payment status. Taxpayers may also use Direct Pay, debit, or credit card instead of mailing paper checks to reduce delays.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now