The IRS to Test Its Free-Tax File Program in 13 States

This tax season, the Internal Revenue Service intends to roll out a free online filing system for citizens of thirteen states, which include Arizona, California, New York, and Texas.

For many years, the Internal Revenue Service (IRS) has provided free electronic filing for people with lower incomes. However, the range of this program was limited. The IRS claimed that the expense of sustaining such a system had prevented it from offering more comprehensive online filing services.

A study conducted in 2023 estimated that if 5 million people were to file taxes utilizing the IRS, it would be an expense of $64 million. In contrast, 25 million users could cost the IRS $249 million. These figures do not consider any possible savings from paper form conversion.

A different study, showed that an overwhelming majority, 72%, had an interest in the program.

According to experts, even in states that have established the new program, not all taxpayers will qualify.

The new pilot program from the IRS is not intended to help business owners or people with side hustles. This reporting alternative is for W-2 taxpayers who don’t itemize deductions.

The new, free program will be equivalent to internet-based applications like TurboTax.

To begin, the taxpayer will need to access the IRS’ website. The agency will then ask questions similar to what one would come across when using a program like TurboTax.

Reportedly, the Internal Revenue Service will have personnel available to assist with the use of the website.

The pilot program will include Arizona, California, Massachusetts and New York, who will integrate their state taxes into it. Additionally, Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming can use the program, although their state taxes were not included.

Congress enacted the Inflation Reduction Act in 2022, prompting the initiation of the pilot program.