this post was submitted on 28 Jan 2024
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  • Some taxpayers will soon qualify for Direct File, a free tax-filing option from the IRS.
  • The pilot will begin as an invitation-only service before rolling out to certain taxpayers in 12 states by mid-March.
  • In 2023, individual U.S. taxpayers spent an average of $150 to prepare and file returns, according to the IRS.

Eligible states will include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

...

Who qualifies for IRS Direct File

Residents of eligible states with a simple, straightforward return can qualify. The pilot will start with limited types of income, credits and deductions, IRS officials said.

While only certain taxpayers can use Direct File, the bilingual software includes built-in live chat support with IRS assistors.

The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. This means the pilot won’t include anyone with gig economy work or business income.

You must claim the standard deduction to use the Direct File pilot and the system only accepts a few credits — the earned income tax credit, child tax credit and credit for other dependents. The software also accepts tax breaks for student loan interest and educator expenses.

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[–] FlyingSquid@lemmy.world 76 points 9 months ago (5 children)

This is how taxation should work in the U.S. if we were sane:

  1. The IRS sends you a bill or a refund.
  2. You pay it or deposit it.

The end.

The IRS should be calculating what we owe. We shouldn't be doing that ourselves or hiring people to do it for us. Maybe we could finally get the wealthy to pay their fair share.

[–] Ottomateeverything@lemmy.world 33 points 9 months ago (2 children)

The IRS should be calculating what we owe.

They do. That's why you occasionally get bills saying "hey you miscalculated by 70 bucks." They already do the work, they just still make us do it too for.... Reasons.

[–] superduperenigma@lemmy.world 16 points 9 months ago

Reasons

AKA Intuit lobbyists

[–] I_Fart_Glitter@lemmy.world 9 points 9 months ago

Once for a whole year I would get a letter saying "You underpaid by $30, plz pay." So I would pay. Then I would get a letter saying "You overpaid by $30, here is check." So I would cash it. Then I would get a letter saying "You underpaid by $30, plz pay..." There were six or seven of those exchanges. I didn't cash the last check and the letters stopped coming. 🤷‍♂️

[–] Delphiantares@lemmy.world 27 points 9 months ago (1 children)

Or dispute it . This is how it's done almost everywhere else but the tax lobby have a best interest in this not working this way.

Or....you know bring back home ec classes that teach kids how to survive in the world instead of assuming parents will be able to do it

[–] FlyingSquid@lemmy.world 15 points 9 months ago

Sure, bring back home ec classes like that regardless, but that should also have no bearing on a saner taxation system. The one we have is ludicrous.

[–] RegalPotoo@lemmy.world 8 points 9 months ago* (last edited 9 months ago)

As an example of how this could work based on how it does where I live;

  • When you get a job, open a bank account or a shareholding account you fill in a form telling them your IRD number and tax code. There is a flow chart on the back of the form to help you work out what your code is, but it is derived from the amount of income you expect to earn throughout the year and if you have any special statuses that significantly change how you pay tax (eg, of you have a student loan or owe child support)
  • Before you are paid (your income, dividends, interest, profit from share sales etc), the party paying you uses your tax code to determine the percentage tax you owe, then sends the tax plus a filing directly to the IRD on your behalf
  • At the end of the tax year, IRD looks at all the filings, totals up all your income, totals up all the tax you've paid, checks if you are eligible for certain tax credit, and works out if you've paid the right amount of tax
  • You get notified of the outcome, and get a chance to correct it (eg, if you've made charitable donations and want to claim a credit based on that etc)
  • Once the filing is finalised (which happens automatically if you do nothing) you either get a bill in the post, a cheque, or the money deposited directly into your bank account if you've nominated one - unless you owe them less that $10, in which case you get a letter saying that they've written the debt off and you owe nothing

No muss, no fuss. If you've got an interest in a trust or own a company then it gets a bit more complicated and you might need an accountant to file for you, but for 95% of people it's free, happens automatically, and they aren't stuck with a big bill at the end of the year

[–] kingshrubb@lemmy.world 6 points 9 months ago

Agree. Then TurboTax and other tax preparers wouldn't be able to rip us off to the tune of billions of $ too.

[–] Burn_The_Right@lemmy.world 38 points 9 months ago (2 children)

FreeTaxUSA.com is free for most types of filings and very inexpensive for complex filings. If you don't qualify for the new IRS program, the next best thing is definitely going to be FreeTaxUSA.

[–] nexas_XIII@lemm.ee 8 points 9 months ago

Agreed, I use them and paid $15 for state filing only. There are other services if you want extra but they've been my go to for a couple years now

[–] SinningStromgald@lemmy.world 4 points 9 months ago

Used them for the first time this year and it was a great experience. Still can't figure out what add-on made it not work in my desktop Firefox but that's minor.

[–] SuperTulle@lemmy.blahaj.zone 14 points 9 months ago (3 children)

Dear United States, nice to see you finally catching on to what we've been doing since 1999.

Love,
Sweden

[–] espentan@lemmy.world 6 points 9 months ago

Norway here, I've been working since 1995 and I can't ever recall having to "do my taxes".

[–] bobs_monkey@lemm.ee 5 points 9 months ago

Sweden: has sane taxation system US: how are we supposed to get middlemen in there to profit off the populace? No no, this won't work.

[–] Theoriginalthon@lemmy.world 5 points 9 months ago

Just out of interest I checked the UK's system called PAYE, it's was fully introduced in 1944. The only people that have to deal with bullshit tax returns are people that are probably going to be making enough money to be able to afford someone to sort it out for them anyway.

[–] IdiosyncraticIdiot@sh.itjust.works 12 points 9 months ago* (last edited 9 months ago) (2 children)

Friendly reminder that if your Adjusted Gross Income (AGI) is less than $79,000 you can already do "Guided Tax Filing" for free. If your AGI is more than $79k, you can still do your taxes for free, but have to do them completely manually which is generally considered risky if you don't know what you're doing.

[–] superduperenigma@lemmy.world 11 points 9 months ago (1 children)

Another tip: turbo tax and other tax preparation software charges you money only to file your taxes. You can fill out all of the information on their website for free as long as you don't file, then use all of the numbers they crunch as a guide when you do your own taxes manually. Basically, you know what all of the numbers are supposed to come out to based on what turbo tax calculated, so if you're getting something else when you prepare your own taxes you know there's some mistake in that section that needs to be corrected.

[–] naught@sh.itjust.works 10 points 9 months ago (1 children)

Or use Free Tax USA for completely free federal filing

[–] superduperenigma@lemmy.world 2 points 9 months ago (1 children)

My comment also applies to state filing, which is not free through Free Tax USA

[–] raynethackery@lemmy.world 2 points 9 months ago

Their website says state filing is free for people with an AGI of $45,000 or less.

[–] MicroWave@lemmy.world 2 points 9 months ago

Awesome tip

[–] manucode@feddit.de 11 points 9 months ago

They should call it Make American Government Payments Incredibly Easy, or Magpie for short.

[–] GlendatheGayWitch@lemmy.world 4 points 9 months ago

Tax Hawk is also free for federal returns and has been around for a few years.

https://www.taxhawk.com/