After successful testing, the IRS has launched a new electronic system called Direct File, allowing taxpayers from 12 selected states to file their federal income taxes directly. This free online tool is designed for individuals with simple W-2s and who claim a standard deduction. Taxpayers in states like Florida, New York, California, and others can take advantage of this service.
The Treasury Department estimates that around one-third of all federal income tax returns filed could be prepared using Direct File. Approximately 19 million taxpayers may be eligible to use this tool during the current tax season. The program will also offer a Spanish version to cater to a wider audience.
Direct File aims to simplify the tax filing process and eliminate unnecessary fees associated with commercial tax preparation software. This initiative aligns with President Biden's goal of reducing costs for working families. The system provides a step-by-step guide with easy-to-answer questions, making it user-friendly for taxpayers.
While Direct File can be used for federal income tax filing, taxpayers residing in states that require filing state taxes will need to do so separately. The IRS hopes that this new government service will eventually replace the need for commercial tax software like TurboTax for many taxpayers.
This innovative approach is part of the IRS's ongoing efforts to enhance taxpayer services and streamline the tax filing process. By offering a free and straightforward tool like Direct File, the agency aims to put more money back into the pockets of American families.
Overall, Direct File represents a significant step towards modernizing tax filing procedures and providing a cost-effective solution for millions of taxpayers across the country.
