IRS Will Offer Free (But Limited) Direct E-Filing Next Year
A subset of taxpayers will be able to kick Intuit and its ilk to the curb and instead file their 2023 federal taxes online at no charge via a new Direct File option the Internal Revenue Service announced Tuesday.
This step by the IRS, following decades of successful lobbying by tax-prep vendors to stop the government from competing with them online, happened after Congress told the agency to change course. Last year’s Inflation Reduction Act not only provided numerous tax credits for energy-efficiency expenditures but also directed the IRS to study offering direct online filing.
The IRS is starting small, limiting Direct File to taxpayers in Arizona, California, Massachusetts, and New York (its statement says their tax departments “decided to work with the IRS to integrate their state taxes into the Direct File pilot”). Although people in zero-income-tax Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming may also be able to try it out.
The Washington Post reported that the IRS will send invitations to selected, eligible taxpayers “around mid-February,” citing an IRS briefing. Later on, “more and more eligible taxpayers will be able to access the service to file their 2023 tax returns," it says.
This 1.0 version of Direct File—which the IRS describes as ”a mobile-friendly, interview-based service” that will be available in English and Spanish—will also only cover simpler tax situations.
The IRS announcement says it expects this app to include W-2 wage income, interest income of $1,500 at most, unemployment compensation, and Social Security and railroad retirement income—meaning gig workers and other Schedule C types, myself included, will have to sit this one out.
Direct
Read more on pcmag.com
