The Internal Revenue Service launched a new tax filing pilot program in 12 states on Tuesday.
The new program is called IRS Direct File. It allows eligible taxpayers to get tax returns ready and file online at no charge.
It’s been described as an alternative to commercial products and services like TurboTax and H&R Block, which charge fees.
The program was opened earlier this year in January to state and federal government employees in certain localities.
@scrippsnews The #IRS has launched a new free #tax filing tool for eligible #taxpayers ♬ original sound - Scripps News
The Treasury Department estimates one-third of all federal income tax returns could be prepared using the Direct File tool. About 19 million taxpayers may be eligible to use it this tax season.
But not everyone agrees this program is necessary. Tax preparation companies say it’s not needed because free tax prep services already exist.
The 2022 Inflation Reduction Act included $80 billion for IRS improvements, including the Direct File program.
Direct File also shows taxpayers the math, so that they are assured accuracy. Live customer support is also available.
So how do you know if you can use this new program?
You can start by checking your eligibility on the IRS website.
The program is currently available for residents in Arizona, California, Florida, Massachusetts, New York, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Officials are hoping at least 100,000 people participate in the program this year.
Direct File only supports a limited set of tax situations currently. Right now, it supports income tax documents from an employer, unemployment compensation, and Social Security benefits. It does not support income received from payment apps or online marketplaces, or income from gig work, for example. It also currently does not support itemized deductions.
Important changes you need to know about this 2024 tax season
The IRS raised the tax brackets by 5.5%; a financial expert says this could mean you will owe less in taxes or see a bigger refund.
