The Internal Revenue Service has officially rolled out its new online program – Direct File – offering a cost-free method for taxpayers in 12 states, including Massachusetts, to easily submit their federal income tax returns. This initiative follows a period of thorough testing and aims to simplify the tax filing process for citizens with straightforward tax situations, as reported by Boston 25 News.
According to an announcement made by the Treasury Department, as much as one-third of all filed federal tax returns could potentially be processed using Direct File. This new service is set to benefit around 19 million taxpayers for the current tax season, hoping to serve directly through an interface that can even smoothly function on a smartphone. “Direct File will offer millions of Americans a free and simple way to file their taxes, with no expensive and unnecessary filing fees and no upselling, putting hundreds of dollars back in the pocket of working families each year, consistent with President Biden’s pledge to lower costs,” National Economic Advisor Lael Brainard stated, as reported by Boston 25 News.
Serving as a challenge to commercial tax preparation software giants, such as TurboTax, the Direct File system is part of a broader ambition by the IRS to provide a government-operated service that could replace some taxpayers’ reliance on private tax prep offerings. This move has been met with criticism from officials at Intuit, TurboTax's parent company, labeling it as a "solution in search of a problem." Contrary to this view, a government-study found a mere 4% of taxpayers were actually using preexisting free tax filing methods provided by private software, according to the information made available by CBS News Boston.
Sen. Elizabeth Warren applauded the service, affirming that "about a third of taxpayers" in Massachusetts are set to benefit from Direct File. "This is the start of American taxpayers having a truly free and easy option to file their taxes directly with the IRS, saving people time and money," she told Boston 25 News. While Direct File is designed to accommodate people with simple W-2 income or seniors who receive Social Security benefits, it does not support taxpayers with gig work income or those who receive payment through apps, nor does it cater to those with pension or retirement account earnings.
Taxpayers from states like Massachusetts, New Hampshire, New York, Florida, California, and several others are among those eligible to use the system this tax season and can check their eligibility online. In Massachusetts, Direct File users will be directed to MassTaxConnect for their state returns after completing their federal tax submissions, as CBS News Boston notes. With the federal tax deadline on April 15 and an extension to April 17 for Massachusetts due to the Patriots Day holiday, the launch of Direct File comes just in time for the season's closing stretch.
