File with a helpful IRS – making tax filing easier and cheaper – The Ukiah Daily Journal

FILE – The exterior of the Internal Revenue Service (IRS) building is seen in Washington, March 22, 2013. The IRS is touting the improvements it has made to its customer service since receiving tens of billions in new funds through the Democrats’ Inflation Reduction Act. The agency’s leadership is trying to draw attention to what has been done to repair the agency’s image as an outdated and maligned tax collector. Monday, April 15, 2024 is the last day to file tax returns or defer. (AP Photo/Susan Walsh, File)

Who said the Internal Revenue Service only wants to make American taxpayers’ lives miserable?

Thanks to that federal agency that everyone loves to hate, millions of taxpayers will find the dreaded annual tax filing ritual an easier and cheaper experience.

That’s because the IRS and the U.S. Treasury Department announced plans to expand Direct File, the free tax filing program, nationwide starting in 2025.

“After a successful pilot, we are making Direct File permanent and inviting all fifty states to offer this free filing option to their residents,” U.S. Treasury Secretary Janet Yellen said in a statement. “The Treasury Department and the IRS look forward to working with states to expand Direct File to Americans across the country.”

News of the Direct File expansion comes about a week after the IRS announced plans to also expand Free File, the agency’s partnership with a coalition of private tax software companies that allows many Americans to file federal taxes for free.

During the 2024 filing season, Direct File availability was limited to taxpayers in 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

More than 140,000 users have successfully filed returns through Direct File, with the pilot saving an estimated $5.6 million in tax preparation costs, the agencies announced in April.

The IRS also cited high levels of satisfaction among those who used Direct File, with 90% of 11,000 respondents in a GSA Touchpoints survey rating their experience as “excellent” or “above average.”

Taxpayers told the IRS they appreciated that Direct File was always free and that there were “no hidden fees or attempts to upsell users as they went through the filing process,” according to the statement.

The pilot focused on simple returns, including taxpayers with W-2 wages, Social Security retirement income, unemployment benefits and interest of $1,500 or less. However, this excluded taxpayers with contract income reported on Form 1099-NEC, gig economy workers, and self-employed filers.

In addition, filers had to claim the standard deduction, which for 2023 was $13,850 for single filers and $27,700 for married couples filing jointly.

It is expected that more Americans will qualify for the Direct File option in the future.

“We are also exploring ways to make additional taxpayers eligible to use the system next year and beyond. Over the coming years, our goal is to gradually expand the scope of Direct File to support the most common situations, with a particular focus on tax situations that impact working families,” IRS Commissioner Danny Werfel told reporters during a conference call on May 30.

“Direct File is an additional option for filing federal tax returns,” Werfel said. “It is not intended to replace other important options available to commercial providers who are critical partners with the IRS in achieving a successful tax system for the nation.”

Werfel added that the agency will share more details later this year about Direct File’s expanded scope for 2025, including which states respond to the invitation and join.

Meanwhile, Free File, the IRS’s more established tax filing tool, processed 2.9 million returns through May 11, a 7.3% increase over the previous year.

The IRS said it will continue to make this free private sector software available to taxpayers through October 2029.

Now in its 22nd filing season, Free File is a public-private partnership between the IRS and several tax preparation software companies. Through this partnership, tax preparation and filing software providers make their online products available to eligible taxpayers.

Eight private sector Free File partners are offering online guided tax software products this year to any taxpayer, including active duty military, with an adjusted gross income (AGI) of $79,000 or less in 2023. Additionally, those with an AGI of more than $79,000 use the IRS’s free fillable forms.

The program is only available on IRS.gov.

This year, Free File saw an increase of approximately 200,000 tax returns filed through the program, to 2.9 million as of May 11. That’s an increase of 7.3% compared to the 2.7 million filed in the same period last year.

“We were pleased to see growth in the program this year and we look forward to continuing this important partnership with the tax software industry. Free File was part of a successful filing season at the IRS, which saw increased interest in a range of free programs to help taxpayers,” Werfel said.

To find the right IRS Free File offer, taxpayers can visit the IRS Free File webpage.

So while paying taxes will never be considered an enjoyable experience, the IRS has at least tried to take less money out of our pockets.