Completing and sending required income tax paperwork to the IRS can be a complicated and sometimes costly process.
To get it done, you may use tax software companies such as TaxAct or Turbo Tax, hire a tax preparer at a company like H&R Block, or work with a CPA.
But now some U.S. residents can use the IRS Direct File program, which is currently available in 12 states. It gives taxpayers the ability to file their tax returns online without a middleman and at no extra charge.
[How to Find a Reputable Tax Preparer Near You]
Here’s how Direct File works and who it may benefit.
What Is Direct File?
The IRS developed Direct File for people who have relatively simple tax situations. It enables qualifying taxpayers to fill out and submit their tax return straight to the IRS. The intention is to streamline what has been, for many people, an overly complex and sometimes expensive process.
Like other tax preparation software, Direct File guides you through the required tax forms. Each step you take will prompt a calculation that shows the reason behind it so you understand what is happening to lower or increase your tax obligation as you go along.
If at any point in the process you have questions, Direct File will give you access to special IRS customer service representatives for live support through the program’s chat feature.
At the end you’ll receive a calculation of your refund or tax owed. Because you’re working with the IRS, your return is already with the agency, and there will be no fee attached.
Direct File is designed to be easy and secure, with the ability to safely pause and then return to the forms at any time. As long as you finish filing before the April deadline, you’re good to go. In the event you’re owed a refund and choose the direct deposit option, you should get the money in fewer than 21 days.
[Read: When You Should (and Shouldn’t) Worry if Your Tax Refund Is Delayed.]
Eligible States for Direct File
Direct File is still in its pilot phase, so it’s not currently available everywhere in the U.S. For tax year 2023, qualifying residents of the following twelve states can use the program:
— Arizona
— California
— Florida
— Massachusetts
— Nevada
— New Hampshire
— New York
— South Dakota
— Tennessee
— Texas
— Washington State
— Wyoming
Not all of these states impose state income taxes, but if you live in one that does — Arizona, California, Massachusetts, or New York — you’ll be directed to a different tax filing program after you’ve completed filing your federal return.
Who Can Use Direct File
There are some restrictions on who can use Direct File. If your tax situation is simple and you pay taxes in the pilot program states, you may use it as long as you meet certain qualifiers:
— You lived in the same state for the entire calendar year 2023.
— Your income is earned from jobs that generate a Form W-2, Social Security and railroad retirement income, unemployment benefits and interest up to $1,500.
Your must also meet the income restrictions:
— $200,000 or less as a single filer.
— $160,200 or less if you had more than one employer during the tax year.
— $125,000 or less if you file as married filing separately.
— Combined wages of no more than $250,000 if you file as married filing jointly.
[Read: Married Couples: Is It Better to File Taxes Jointly or Separately?]
Direct File also allows you to:
— Claim the earned income tax credit, child tax credit and credit for other dependents.
— Claim the standard deduction.
— Claim deductions for educator expenses and student loan interest.
How to Access Direct File
First, visit directfile.irs.gov to find out if you’re eligible. If you can use Direct File, the IRS will verify your identity through ID.me before you can begin. Now you’ll be providing your tax information directly to the IRS, with no third-party involved.
In the event you can’t use the program, the IRS will direct you to Free File on IRS.gov, which partners with a number of private software companies. If your adjusted gross income was $79,000 or less in 2023, you can file through one of their platforms at no charge.
Should You Use Direct File?
Completing your tax return and filing it at no additional cost is an overall positive, says Paul Miller, CPA and founder of the New York-based accounting firm Miller & Company.
“Everyone should be given the right to have their returns done for free,” Miller says. “I’m a believer that the government should help the people.”
However, Direct File may not be appropriate for everyone, even if you do qualify.
“There are still a lot of questions about the program, like what happens if you forget to get a credit,” Miller says. “If you just have a W-2 and enter everything correctly, you should be fine, but there are all kinds of nuances to a tax return.”
If you prefer one-on-one assistance from a professional, try to reach a tax preparer now or get an extension if you can’t, Miller says. Money is on the table, and you don’t want to lose any of it.
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These 12 States Can Now File Taxes Directly With the IRS originally appeared on usnews.com
