The Internal Revenue Service on Tuesday, October 17, 2023, unveiled a free tax program of $11 billion that will be tested in 13 states for the 2024 filing season. The 2024 Direct submit trial may be open to residents of those states. This new service will provide taxpayers the option to IRS Free Tax Filing 2024 electronically submit their federal tax returns to the IRS. Giving taxpayers options on how to communicate with the tax authority is an objective of the IRS Strategic Operating Plan, and projects like Direct File embody this purpose.
IRS Free Tax Filing 2024
The provision of taxpayers with a new option to submit their forms for free directly with the IRS Free Tax Filing 2024 will be tested with this important step ahead, according to IRS Commissioner Danny Werfel. “In this small-scale experiment for 2024, we’ll be working closely with the states who have agreed to take part in a critical test of the state integration. This will enable us to collect crucial data on the Direct File program’s future course. The 2024 Direct submit trial may be open to residents of those 13 states.
This new service will provide taxpayers the option to IRS Free Tax Filing 2024 electronically submit their federal tax returns with the IRS. Taxpayers with certain sorts of income, credits, and deductions – taxpayers with relatively basic returns – will only be eligible to participate in the pilot, which is restricted by the state in which the taxpayer lives. The Earned Income Tax Credit and the Child Tax Credit are two significant tax credits that will be covered by the Direct File pilot, according to an announcement made by the IRS.
Why does IRS Free Tax Filing 2024 matter?
Free online tax filing might change how many Americans file their returns and could have a significant impact on the multi-billion dollar tax preparation business.
- This method, known as Direct File, will include state taxes in Arizona, California, Massachusetts, and New York.
- Participants in the pilot program may also be residents of the nine other states without income taxes: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
- Based on the information gathered during the pilot, the IRS will assess how to resolve problems for further iterations of the program.
- W-2 earnings, social security and railroad retirement benefits, unemployment benefits, and interest of up to $1,500
- In May 2023, the IRS sent a report to Congress.
- According to the IRS, the pilot program was open to all states.
How does IRS Free Tax work?
Direct File will be accessible in both English and Spanish, be mobile friendly, and be interview-based.
- It will be unveiled to a select number of qualified taxpayers initially, and subsequently, it will be extended.
- Other tax preparation software is available to taxpayers in the 13 states that qualify.
Who is Eligible for IRS Direct File in 2024?
According to Laurel Blatchford, chief implementation officer for the Inflation Reduction Act at the U.S. Department of the Treasury, “the pilot will launch in phases to ensure a good experience for taxpayers.” The pilot’s emphasis for 2024 will be on individual taxpayers who have All taxpayers won’t be qualified for the “relatively simple returns,” either. The IRS anticipates that the program will cover Form W-2 wages, Social Security benefits, unemployment compensation, and interest payments of up to $1,500.
Along with the standard deduction, student loan interest deduction, and tax break for educator costs, the government also intends to cover those claiming the earned income tax credit, child tax credit, and credit for additional dependents. Werfel added that during the pilot’s first year, certain taxpayers would be excluded.
Overhaul at the IRS
- The IRS has had years of decreasing funds, and lowering workforce and audit rates. The Democrats’ 2022 Inflation Reduction Act, a massive government spending bill, would provide the agency with long-term financing to clamp down on tax cheaters and reform its operations.
- The IRS claims the funds have improved taxpayer services. It handled 3 million more calls and lowered phone wait times to three minutes from 28 minutes in the 2023 filing season.
- The IRS plans to digitize all paper tax returns by 2025. The change should reduce refund processing delays in half and speed them up by four weeks.
- Republicans have questioned if the Inflation Reduction Act’s $80 billion investment in the IRS over 10 years would boost audits of normal Americans. A bipartisan debt limit arrangement allowed Republican legislators to regain $20 billion earlier this year.
- The White House said the decrease won’t significantly impact the IRS’s capabilities in the coming years. The Biden administration has also consistently said that people earning less than $400,000 a year would not be audited owing to the extra funds.