The U.S. Department of the Treasury is pioneering an exciting project by testing a free tax filing program, Direct File, through the Internal Revenue Service (IRS). This pilot is currently active in twelve undisclosed states, and its goal is to offer a simple, cost-free way for citizens to file their tax returns. If successful, we could see a national roll-out in the future.
But what does this mean for the average American? The move illustrates the Treasury Department’s commitment to improving financial services. It’s estimated that about a third of all individuals filing federal income tax returns — approximately 19 million people — could benefit from this initiative. That’s many people whose lives could be made a bit easier each tax year. And with careful management, this could extend even further.
Direct File is intended for simple tax returns only
Deputy Secretary of the Treasury Wally Adeyemo indicates that Direct File is intended for simple tax returns only. However, if you’re a Form W-2 employee who opts for standard deductions, this program could be a game-changer. But remember, it’s not meant for everyone. If you itemize deductions, you might encounter some limitations. So, it helps to consult tax professionals to determine if this service is right for you.
The Treasury anticipates only about 100,000 filings during this initial phase, roughly 0.5% of the total eligible population. As the program becomes more popular, the number of filings is expected to increase significantly. Of course, the success of the program’s first phase is crucial in shaping its future and, ultimately, reaching as many eligible individuals as possible.
Although Direct File is currently only available in twelve states, it could potentially qualify taxpayers nationwide in the future. This revolutionary program is a joint effort between the IRS and the Free File Alliance. Their ultimate goal is to expand the availability of federal filing provisions by 2023.
