MARCH 12, 2024:
NEW YORK (AP) — After weeks of testing, an electronic system for filing returns directly to the IRS is now available (March 11, 2024) for taxpayers from 12 selected states.
The new system, called Direct File, is a free online tool. Taxpayers in the selected states who have very simple W-2s and claim a standard deduction may be eligible to use it this tax season to file their federal income taxes. The program will also offer a Spanish version, which will be available starting at 1 p.m. Eastern Time on Tuesday.
The Treasury Department estimates that one-third of all federal income tax returns filed could be prepared using Direct File and that 19 million taxpayers may be eligible to use the tool this tax season.
“Direct File will offer millions of Americans a free and simple way to file their taxes, with no expensive and unnecessary filing fees and no upselling, putting hundreds of dollars back in the pocket of working families each year, consistent with President Biden’s pledge to lower costs,” said National Economic Advisor Lael Brainard.
Certain taxpayers in Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, Arizona, Massachusetts, California and New York can participate. Direct File can only be used to file federal income taxes, taxpayers from states that require filing state taxes will need to do so separately.
The Direct File pilot is part of the agency’s effort to build out a new government service that could replace some taxpayers’ use of commercial tax preparation software, such as TurboTax. It’s meant to be simple and provides a step-by-step walkthrough of easy-to-answer questions.
State-by-state eligibility info from the U.S. Treasury Department is below.
State | Estimate of Potentially
Eligible Taxpayers |
California | 5.2 million |
Arizona | 690,000 |
Florida | 2.4 million |
Massachusetts | 850,000 |
New Hampshire | 200,000 |
Nevada | 480,000 |
New York | 2.8 million |
South Dakota | 110,000 |
Tennessee | 960,000 |
Texas | 3.8 million |
Washington | 1.1 million |
Wyoming | 80,000 |
FEBRUARY 12, 2024:
In the coming weeks, South Dakotans will be given a chance to file their taxes online directly with the I-R-S– at no cost. As part of a pilot project offered in a dozen states, I-R-S officials hope the “Direct File” option will be ready by mid-March, giving taxpayers in selected states about one month to take advantage before the general filing deadline.
Jessie Schmidt, with the Better Business Bureau of South Dakota, says the pilot program is designed for those planning a straightforward federal return.
“[If] you’re just a direct W2 employee, and that’s where the majority of your income comes from, then direct finally may be just absolutely perfect.”
Those who plan to use certain credits, like the Child Tax Credit, are eligible, but Schmidt cautions there are similar credits that can’t be used with the pilot program.
“If you use the Child and Dependent Care Credit – so if you’ve got two kids in daycare and you’re using that dependent care credit – then you can’t use this.”
Schmidt says people can use the Direct File pilot program on a smartphone, tablet, laptop or desktop computer. The I-R-S says the option isn’t available for people who work in the “gig economy” and lean on 10-99 documents, nor for those who itemize deductions.
The Better Business Bureau says the pilot program doesn’t appear to have any red flags and does use a secure portal. However, larger tax preparation software companies have criticized the project, saying it won’t help people maximize their refunds.
The new service only applies to federal income tax returns and is separate from the I-R-S’s longstanding “Free File” option. Free File guides households with incomes below $79-thousand to outside vendors for no-cost, online filing.
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