Janice R. Andrews
To assist individuals with straightforward tax returns, the Internal Revenue program (IRS) has launched its free tax filing program, Direct File, in 12 states. The US Treasury Department said today that this service, which is available in both English and Spanish, has officially launched after undergoing rigorous testing.
The Treasury Department said, “Direct File offers taxpayers in 12 states a safe and free option to file their taxes directly with the IRS.” “With no hidden fees and a user-friendly interface, Direct File ensures accuracy and transparency in tax filing, accessible across various devices.”
Taxpayers can visit directfile.irs.gov to determine if they qualify for Direct File. According to projections from the Treasury Department, this method could be used to create about one-third of all federal income tax returns.
An estimated 18.7 million taxpayers in the 12 states that qualify for Direct File, with 5.2 million in California and 80,000 in Wyoming, are eligible. The Treasury Department reports that thousands of taxpayers in these states successfully filed their forms during the pilot testing phase.
Even though this is only a pilot program for now, it may be expanded to more states in the future with less eligibility requirements.
State Tax Options and Requirements for Eligibility:
- The IRS has worked with the states of Arizona, California, Massachusetts, and New York to incorporate state taxes into the Direct File pilot program.
- Eight states—Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming—are also exempt from income taxes in the experimental program.
- Alaska was not included in the pilot program, despite the original intentions, because of restrictions on reporting the Alaska Permanent Fund Dividend for federal income tax reasons.
Supported Income Types and Restrictions:
Income of all kinds, including employment income, unemployment benefits, Social Security income, and interest income up to $1,500, are supported by Direct File. However, its use is limited by a number of factors:
- Some forms of revenue are not supported, including rent, rewards, awards, gig labor income, payments via applications, online marketplaces, or payment cards.
- There are income thresholds; individuals making over $200,000 ($160,200 with multiple employers) or those filing as “Married Filing Separately” with wages over $125,000 are not eligible to use Direct File.
- Direct File is not compatible with health savings account withdrawals or insurance purchased through the HealthCare.gov marketplaces.
- The service does not allow itemized deductions, but it does support certain tax credits, such as the Earned Income Tax Credit and the Child Tax Credit.
With Direct File, eligible taxpayers in participating states have an easy-to-use and quick option for filing their taxes, especially for those with simple tax situations.
