The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers in up to 13 states, the agency announced today. Direct File, as the service is called, is a blow to Turbotax, H&R Block and other paid tax preparation services, whose owners have resisted simple, free tax filing for decades.
“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers with a new option to file their returns for free directly with the IRS,” IRS Commissioner Danny Werfel said in a statement. release. press release announcing the news.
The program is more or less a direct result of the funding provided by the Inflation Reduction Act of 2022, through which $15 million was allocated for the purpose of exploring and implementing a simple and effective tax filing service. free provided by the government.
For the past year and a half, the IRS has been developing the pilot program, which it characterizes as “one more potential option” ranging from self-managed Free File to commercial products like Turbotax and a tax preparation professional. .
The IRS describes Direct File as “a mobile, interview-based service” available in English and Spanish, intended for people with simpler tax situations, such as W-2 forms and common income credits and deductions. It’s unclear whether the interviews are with real people or some kind of automated or semi-automated process. But this, like many of its details, will likely change as the agency receives feedback from this limited-scale pilot.
Arizona, California, Massachusetts and New York are the four states that will integrate with Direct File by 2024 (that is, fiscal year 2023); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming “may also be eligible,” as they do not have state income tax, but it is not definitive. All states were given the opportunity to participate in the Direct File program, but not all were “able to join.”
Among residents of these states, a limited number of people with “relatively simple returns” will have the opportunity to try Direct File. This in turn “will allow the IRS to evaluate the costs, benefits, and operational challenges associated with providing a voluntary Direct File option to taxpayers.” In software terms, we would probably call it alpha.
Intuit and others who have surreptitiously fought for many years against simple, free and transparent tax filing (as ProPublica documented not long ago) are undoubtedly furious and scheduling emergency meetings. Like broadband and mobile phone companies, public opinion has increasingly turned against them as the predatory nature of their services and lobbying has become evident. When a free anime dating simulator can pay its taxes as well as a billion-dollar company, the worm has turned.
Expect to hear more about this program as tax season approaches.
IRS to Test Free Tax Filing Service in 2024
Introduction
The IRS has announced that it will be testing a new free tax filing service called Direct File in 2024. This service aims to provide a simpler and more convenient option for taxpayers to file their returns directly with the IRS. The introduction of Direct File is seen as a blow to paid tax preparation services like Turbotax and H&R Block, which have been resistant to offering simple and free tax filing options. This article will explore the details of the Direct File program, its benefits, and the potential impact it may have on the tax preparation industry.
Background
The funding for the Direct File program comes from the Inflation Reduction Act of 2022, which allocated $15 million to explore and implement a free tax filing service provided by the government. Over the past year and a half, the IRS has been developing the pilot program, which aims to provide taxpayers with another option in addition to self-managed Free File and commercial products like Turbotax and professional tax preparation services.
About Direct File
Direct File is described by the IRS as a mobile, interview-based service that will be available in English and Spanish. It is specifically designed for taxpayers with simpler tax situations, such as those who have W-2 forms and common income credits and deductions. The exact details of the interviews are still unclear, whether they will be conducted by real people or through an automated or semi-automated process. As the pilot program progresses, the IRS will continue to gather feedback and make any necessary changes to improve the service.
Participating States
By 2024, Arizona, California, Massachusetts, and New York will be the four states that will integrate with the Direct File program. Additionally, states like Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming may also be eligible to participate as they do not have state income tax. However, it is not yet definitive whether these states will join the program. The Direct File program offers a limited number of taxpayers with relatively simple returns the opportunity to try the service. This will allow the IRS to evaluate the costs, benefits, and operational challenges associated with providing a voluntary Direct File option to taxpayers.
Reactions and Implications
The announcement of Direct File has created an uproar among companies like Intuit, the owner of Turbotax, who have long fought against simple, free, and transparent tax filing options. Public opinion has increasingly turned against these companies due to their predatory nature and lobbying efforts. The popularity of alternative options, such as filing taxes through a free anime dating simulator, highlights the need for a more accessible and fair tax filing system. The Direct File program marks a significant step forward in this direction, and its impact on the tax preparation industry will be closely watched.
Conclusion
The IRS’s decision to test the Direct File program in 2024 is a significant development in the quest for a simple and free tax filing service. Taxpayers in select states will have the opportunity to try this mobile, interview-based service that aims to provide a more convenient option for filing their returns directly with the IRS. While the details are still being finalized, the introduction of Direct File is expected to have a profound impact on the tax preparation industry and may lead to a shift in the perception of paid tax preparation services. As tax season approaches, further information about the Direct File program is expected to be released.
Summary
The IRS has announced the launch of a pilot program called Direct File, which will provide a free tax filing service for select taxpayers in up to 13 states starting in 2024. This service aims to simplify the tax filing process and provide an alternative to paid tax preparation services like Turbotax and H&R Block. Direct File is a mobile, interview-based service available in English and Spanish, designed for taxpayers with simpler tax situations. The program is a result of the funding provided by the Inflation Reduction Act of 2022, with $15 million allocated for its development. By testing Direct File, the IRS aims to evaluate the costs, benefits, and operational challenges associated with providing a voluntary tax filing option directly with the IRS. The four states initially integrating with the program are Arizona, California, Massachusetts, and New York, with the possibility of additional states joining. The announcement of Direct File has attracted attention and raises questions about the future of paid tax preparation services.
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The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers in up to 13 states, the agency announced today. Direct File, as the service is called, is a blow to Turbotax, H&R Block and other paid tax preparation services, whose owners have resisted simple, free tax filing for decades.
“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers with a new option to file their returns for free directly with the IRS,” IRS Commissioner Danny Werfel said in a statement. release. press release announcing the news.
The program is more or less a direct result of the funding provided by the Inflation Reduction Act of 2022, through which $15 million was allocated for the purpose of exploring and implementing a simple and effective tax filing service. free provided by the government.
For the past year and a half, the IRS has been developing the pilot program, which it characterizes as “one more potential option” ranging from self-managed Free File to commercial products like Turbotax and a tax preparation professional. .
The IRS describes Direct File as “a mobile, interview-based service” available in English and Spanish, intended for people with simpler tax situations, such as W-2 forms and common income credits and deductions. It’s unclear whether the interviews are with real people or some kind of automated or semi-automated process. But this, like many of its details, will likely change as the agency receives feedback from this limited-scale pilot.
Arizona, California, Massachusetts and New York are the four states that will integrate with Direct File by 2024 (that is, fiscal year 2023); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming “may also be eligible,” as they do not have state income tax, but it is not definitive. All states were given the opportunity to participate in the Direct File program, but not all were “able to join.”
Among residents of these states, a limited number of people with “relatively simple returns” will have the opportunity to try Direct File. This in turn “will allow the IRS to evaluate the costs, benefits, and operational challenges associated with providing a voluntary Direct File option to taxpayers.” In software terms, we would probably call it alpha.
Intuit and others who have surreptitiously fought for many years against simple, free and transparent tax filing (as ProPublica documented not long ago) are undoubtedly furious and scheduling emergency meetings. Like broadband and mobile phone companies, public opinion has increasingly turned against them as the predatory nature of their services and lobbying has become evident. When a free anime dating simulator can pay its taxes as well as a billion-dollar company, the worm has turned.
Expect to hear more about this program as tax season approaches.
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