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Filing Taxes Directly to the IRS: New Option for Taxpayers

A recent development allows a growing number of US taxpayers to file their annual taxes online, directly with the federal government, free of charge. Here’s what you need to know about this initiative, known as Direct File, and its availability in select states.

Introduction to Direct File

The Internal Revenue Service (IRS) has introduced Direct File, its own software for online tax filing. Currently in a pilot phase, Direct File is set to be publicly launched in mid-March, just ahead of this year’s tax filing deadline on April 15.

Eligibility Criteria

While Direct File offers free tax filing, it comes with specific eligibility requirements. To use the tool, taxpayers must have been residents of one of the following 12 states for the entire year of 2023 and must not have income from any other state:

  • Arizona
  • California
  • Florida
  • Massachusetts
  • Nevada
  • New Hampshire
  • New York
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Using Direct File

Taxpayers can sign up and check their eligibility at DirectFile.irs.gov. However, Direct File is currently tailored for “simple” tax returns, primarily those with W-2 wages and common tax credits and deductions. It does not support state income tax returns, except for residents of Arizona, California, Massachusetts, and New York, who can access state-supported tools via Direct File.

Limitations and Exclusions

Certain taxpayers and income sources are excluded from using Direct File at present. Individuals who purchased health insurance through exchanges like HealthCare.gov or used funds from Health Savings Accounts are ineligible. Additionally, taxpayers with other types of income, such as gig workers or independent contractors, and those with more complex deductions or credits, cannot use the service.

Income Thresholds and Support

Direct File is designed to assist households with incomes of up to $125,000, while married couples with combined earnings exceeding $250,000 are not eligible. However, the IRS assures users that the software simplifies the filing process, with many early testers completing their taxes in less than 30 minutes. Additionally, live chat support is available in both English and Spanish, providing assistance with tax-related inquiries and technical support at no cost.

As Direct File continues to evolve, taxpayers in eligible states have the opportunity to experience streamlined and free tax filing directly with the IRS.

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