After weeks of testing, Direct File, an electronic system for filing returns directly to the IRS is now available for taxpayers from 12 selected states.

After weeks of testing, an electronic system for filing returns directly to the IRS is now available to 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.

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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.

[Note]

Additionally, for all taxpayers, if you make $79,000 or less, the IRS has a list of free tax software you can use. Full list here: https://apps.irs.gov/app/freeFile/browse-all-offers/

  • @credo
    11•8 months ago

    While I applaud this, there are A LOT of limitations this first round. Those eligible will be a very slim pool. For example these items exclude you:

    • Paid for child care in order to work
    • Made contributions to a retirement plan
    • Had college tuition or other higher education expenses
    • Paid for energy efficient updates to your home
    • Are not married and over age 65 or disabled with an Adjusted Gross Income (AGI) between $13,850 and $17,500
    • Bought health insurance through a marketplace (like HealthCare.gov)
    • Withdrew money from a health savings account (HSA)
    • Had tips
    • Income received from payment apps, online marketplaces, or payment cards
    • Income from independent contractor and gig work
    • Income from rent, prizes, awards
    • Need to report alimony
    • Income from pension and retirement account distributions
    • Additional limitations if your household income exceeds $125,000. You can’t use Direct File if your wages are more than $200,000 ($160,200 if you had more than one employer). [So two fillers with > $80K ea.? I don’t avidly understand this…]
    • [In AZ] Receive the Arizona Families Tax Rebate in 2023 (most Arizona families with children received the Rebate in late 2023)

    It seems they’ve managed to eliminate a significant number of taxpayers here, from all income levels. It also appears the state income tax rules play in significantly, which is strange to me- but then I guess the IRS needs their cut if you got money back from the state…. Any way, that will be a lot of upkeep for 50 sets of rules and situations, just to start.

    If they can’t pull this off for everyone those left behind will find it very tedious or expensive to do their taxes, as this will likely shrink the base of available commercial options.

    • @[email protected]English
      7•8 months ago

      So basically, claiming any of the most common credits. I count five that I’ve claimed in the past few years (though not all five in one year).

      But given that this is just the first run, I think they’ll expand it for next year. Better to have even some people using it now, than to not let anyone use it until it handles all cases.

    • TragicNotCuteEnglish
      4•8 months ago

      The more you describe it as “cutting who is covered across all income levels”, the more it sounds to me like they are trying to keep it small to make sure they don’t roll out something totally broken that tons of people are relying on. Like a closed beta almost.