The IRS expects hundreds of thousands of taxpayers to use the new online tax filing portal when it opens to the public in March, but the agency is not putting a limit on the number of people who can use it.
The new digital tax payment system, known as Direct File, was initially characterized by the agency as a limited pilot program, but IRS officials said Thursday that the tax payment system could be processed across the 12 states where the program is being rolled out. He stated that there is no upper limit on the number of people.
The Direct File System will be available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Anyone who meets the program's eligibility requirements and resides in one of the 12 testing states can file their 2024 taxes using the free Direct File system, officials said in a call with reporters. said.
Direct file eligibility is limited to those with W2 income of $1,500 or less in standard wages, unemployment compensation, Social Security benefits, and interest. Other types of income, such as income from stocks or other investments, are not supported by this program.
That means gig economy workers who report their income on 1099 forms still won't be able to take advantage of the system.
Additionally, Direct File can only handle standard deductions, not itemized deductions for expenses. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples.
Direct File also supports limited types of tax credits. The system only allows you to select the Child Tax Credit, Earned Income Tax Credit, and Other Dependent Credits.
The taxpayer makes the final decision on which deductions to apply, but similar to how commercial tax preparation software works, the system provides prompts and recommendations about which options are best for the taxpayer.
Companies in the industry have entered into non-compete agreements with the IRS in the past, but are fiercely opposed to the program.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) said in a hearing with the Internal Revenue Service commissioner last April that “Republicans and the tax preparation lobby have in the past been trying to make it seem like this is pretty much the end of Western civilization.'' “I have responded to it,” he said. Danny Werfel.
IRS officials say the program is starting small but is designed to be scalable.
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