Twelve states can now access a new electronic filing system that connects taxpayers directly with the IRS. The IRS recently launched its Direct File pilot program, which enables taxpayers with simple tax situations to file their tax returns online for free.
Direct File is for filers with W-2s and standard deductions; taxpayers with tax situations common to most people can use this program to file their federal income taxes for the current tax season. Additionally, the program will provide a Spanish version to cater to a broader audience, with availability starting at 1 p.m. Eastern Time on Tuesday.
According to estimates from the Treasury Department, around one-third of all federal income tax returns filed could be processed using Direct File. With approximately 19 million taxpayers eligible to use the tool this tax season, Direct File aims to ease the financial strain associated with tax preparation, aligning with President Biden’s objective of reducing costs for working families.
National Economic Advisor Lael Brainard noted the program’s potential to save taxpayers billions of dollars by blocking wasteful filing fees and upsells that often come with commercial tax preparation software.
The Direct File pilot program is available to participating taxpayers living in Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, Arizona, Massachusetts, and California, in addition to New York. However, Direct File is only available for federal income tax filings. Taxpayers residing in states requiring state tax filings must handle those separately.
Direct File’s launch is an essential step in the IRS’s process of creating a user-friendly, 21st-century government service that many expect to replace commercial tax prep software, such as TurboTax, ultimately. Direct File, designed for simplicity, takes the filer through simple questions. For millions of Americans, the simplified form will be all they need.
Source: Adriana Morga and Fatima Hussein, AP News March 12, 2024
