Yesterday, the IRS launched its Direct File pilot program, which lets Americans prepare their taxes for free without using third-party tools like TurboTax or H&R Block.
This tax season, the online tool is only available for some federal income tax filings:
- Taxpayers can use the program in these 12 states: AZ, CA, FL, MA, NV, NH, NY, SD, TN, TX, WA, & WY.
- And filers must have simple tax situations. Think regular W-2 employees, but not gig workers or anyone with investment income.
The IRS claims Direct File is great news for taxpayers, who spent an average of $150 on private tax prep services last year, per the Treasury Department. Meanwhile, the $14 billion for-profit tax prep industry isn't so pleased that the IRS is now poaching its customers. They note that free filing options already exist for many taxpayers (though they come with caveats).
The IRS hopes for 100,000 Direct File users this year, and it'll consider expanding eligibility to business owners after this...