Five Requirements For Filing Taxes For Free Using IRS Direct File
WASHINGTON, DC - SEPTEMBER 15: A sign marks the entrance to the U.S. Internal Revenue Service (IRS) ... More headquarters building on September 15, 2024, in Washington, DC. (Photo by J.)
With taxpayers paying hundreds of dollars to complete and file their income tax returns each year, the IRS has rolled out a free program called IRS Direct File to taxpayers in 25 states. While this program could save taxpayers a lot of money, some taxpayers will not qualify. This article discusses the qualifications to help taxpayers determine if the IRS Direct File program can be used for the upcoming tax filing deadline.
April 15th marks the deadline for individuals to submit their 2024 income tax returns and pay their tax bills. Unlike the majority of taxpayers filing 2023 income tax returns, taxpayers in 25 states can file this year's tax returns for free directly with the IRS. The new program called IRS Direct File has been piloted across a smaller sample of states in recent years before offering it out to a much larger swath of the population for this year's filing season.
Despite the inherent financial benefit of now being able to file taxes without using tax prep software or a CPA firm, many taxpayers still do not know much about this new program. IRS Direct File is a historic and novel program designed to allow taxpayers to complete and file their taxes for free directly with the IRS. A key catch to this program is that it is not available to everybody. In particular, participation in this program follows five key criteria:
Assuming all five requirements are met, the IRS Direct File provides substantial cost savings to taxpayers. For instance, it is estimated that the average cost to file a simple tax return using a CPA is $220. This amount is comparable to tax software providers like Turbo Tax, which advertises costs at over $100 to help taxpayers do their taxes themselves or over $200 for filing taxes with the assistance of an expert. Importantly, these cost savings are borne by those who benefit from it the most, as those with high wages are not eligible for this service. Lastly, the Direct File program limits the uncertainty of taxpayers filing their tax returns as these are remitted directly to the IRS.
However, not all are on board with this service. The Department of Government Efficiency (DOGE) claims that this service is an illegal and blatant power grab due to the use and access of personal taxpayer information. In a Business Insider article, this agency also claims that these services belong to the private sector and that putting them under the federal government's purview is inefficient.
Despite the concerns over the plausibility of the IRS Direct File program, it remains available for filing 2024 income tax returns and could be expanded to more states in future years. As taxpayers near the April 15th deadline, they should be aware that this program is an option available to them for filing their 2024 income tax returns.
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