“The IRS Expands Program Allowing Taxpayers to Directly File Taxes for Free
The Internal Revenue Service (IRS) is enhancing its Direct File program, enabling individuals to submit their tax returns directly to the government without using commercial tax preparation software. IRS Commissioner Daniel Werfel announced that the program, originally introduced as a pilot in 12 states during the 2024 tax season, will now be extended to over 30 million taxpayers in 24 states for the 2025 filing season. Notably, the 2024 pilot saw participants claiming over $90 million in refunds.
Werfel affirmed that significant expansions to the Direct File program will be made in 2025, potentially welcoming additional states to join. The initiative, initially available in specific states such as California and New York, will now be introduced in new states like Alaska, Maryland, and Pennsylvania. Eligibility criteria will also be broadened to include taxpayers with various income sources and tax credits, including the Child and Dependent Care Credit.
Despite the program’s benefits for taxpayers, it has faced criticism from commercial tax preparation software companies that rely on charging individuals for their services. Beyond this, an IRS inspector general report raised concerns about data protection within the IRS Free File Alliance, a separate initiative offering free tax preparation services to low and middle-income taxpayers.
The Direct File program is a result of the Inflation Reduction Act signed into law by President Joe Biden in 2022, allocating funds for the IRS to develop a direct filing system. This move aligns with trends in other countries, such as Germany and Japan, which have successfully implemented similar systems with prepopulated tax forms.”
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