- Some taxpayers will soon qualify for Direct File, a free tax-filing option from the IRS.
- The pilot will begin as an invitation-only service before rolling out to certain taxpayers in 12 states by mid-March.
- In 2023, individual U.S. taxpayers spent an average of $150 to prepare and file returns, according to the IRS.
Eligible states will include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
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Who qualifies for IRS Direct File
Residents of eligible states with a simple, straightforward return can qualify. The pilot will start with limited types of income, credits and deductions, IRS officials said.
While only certain taxpayers can use Direct File, the bilingual software includes built-in live chat support with IRS assistors.
The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. This means the pilot won’t include anyone with gig economy work or business income.
You must claim the standard deduction to use the Direct File pilot and the system only accepts a few credits — the earned income tax credit, child tax credit and credit for other dependents. The software also accepts tax breaks for student loan interest and educator expenses.
Friendly reminder that if your Adjusted Gross Income (AGI) is less than $79,000 you can already do “Guided Tax Filing” for free. If your AGI is more than $79k, you can still do your taxes for free, but have to do them completely manually which is generally considered risky if you don’t know what you’re doing.
Another tip: turbo tax and other tax preparation software charges you money only to file your taxes. You can fill out all of the information on their website for free as long as you don’t file, then use all of the numbers they crunch as a guide when you do your own taxes manually. Basically, you know what all of the numbers are supposed to come out to based on what turbo tax calculated, so if you’re getting something else when you prepare your own taxes you know there’s some mistake in that section that needs to be corrected.
Or use Free Tax USA for completely free federal filing
My comment also applies to state filing, which is not free through Free Tax USA
Their website says state filing is free for people with an AGI of $45,000 or less.
Awesome tip