The Internal Revenue Service (IRS) has introduced a new online tax filing system, ‘Direct File’, available for New York and eleven other states. This free and innovative service is designed specifically for taxpayers with basic W-2 forms, claiming a standard deduction.
Daniel Werfel, the IRS Commissioner, commends the introduction of the Direct File system, viewing it as a significant advancement that facilitates direct and cost-free filing of federal income tax returns. Spanish speakers can also benefit from this platform, illustrating its broad reach.
The Treasury Department anticipates that approximately one-third of all returns, or about 19 million taxpayers, could employ this offers digital solution. Already used by over 20,000 taxpayers, projections show this figure rising to 100,000 in the upcoming weeks. Additional benefits of the system include wizard-style guidance and automatic calculations designed to decrease mistakes and ease the tax filing process.
However, the Direct File system does have limitations. It is currently unavailable for state tax filing and does not support filing for non-residential taxes or returns for prior years. Moreover, it is targeted for straightforward tax scenarios, and for more complicated or unique situations, professional advice may be needed.
Economist Lael Brainard identifies the platform’s potential for providing an affordable and accessible tax filing option. The system’s new live chat feature allows taxpayers to communicate with the IRS in real-time, promoting accuracy and a less intimidating experience.
Despite the optimistic outlook, both IRS Commissioner Werfel and Derrick Plummer, a spokesperson for Intuit, have voiced caution against assumptions on the system’s future usage. Plummer criticizes it as redundant and costly, considering the existence of current free services.
