The IRS's free tax preparation platform is open for business.
After slowly increasing capacity on its live filing platform, the IRS made the platform available to a broader audience on Monday.
The platform is expected to be fully operational on March 12. The pilot program can only prepare relatively basic tax returns, and will only be available to eligible taxpayers in 12 states: Arizona, California, Florida, Massachusetts, Nevada and New Hampshire. New York, South Dakota, Tennessee, Texas, Washington State and Wyoming.
But Live File marks the first widespread appearance of free, government-run online tax preparation in the mass market from commercial providers like TurboTax INTU,
and H&R Block HRB,
Regulators at the Federal Trade Commission alleged that both TurboTax and H&R Block misled consumers about the extent of their free tax preparation services. Both companies deny these accusations.
There are other free options for filing tax returns, including the IRS Free File program. It's an IRS partnership with tax software companies available to taxpayers with income up to $79,000.
Just like H&R Block HRB's free tax preparation software, IRS Direct File has no income limits.
And TurboTax Intu,
But all three can only be used for certain types of tax returns, most of which are simple.
The IRS has slowly rolled out Live File, making it available to taxpayers for certain hours of the day. Starting March 4, it will be available to new users 24 hours a day, according to an IRS official.
However, people who want to use the platform should look for a notice at the top of the site stating that it is open. The official said that the platform may be temporarily unavailable at times if too many users occupy all available slots for a particular day.
“But more spaces will be added every day, and our goal is to ensure that all interested and eligible taxpayers can experience Live File for themselves,” the IRS official added.
Anyone who has already started filing a tax return can continue working on it even if the site is not accepting new users, according to the IRS.
Users in Arizona, California, Massachusetts and New York — the four states on the list that impose a state income tax — can also be linked to the free online preparation of their state returns. Direct File can also help users in Washington State who qualify for certain tax credits.
The Direct File program can handle returns with W-2 job wages, common credits like the child tax credit and the student loan interest deduction. It cannot support returns that need to report capital gains or independent contractor income.
People who plan to use Direct File should be ready to answer eligibility questions when they log into the program. IRS officials who designed the platform said they wanted to ask in advance to quickly screen people who can't use the service.
The IRS began accepting and processing 2023 tax returns on January 29. It has now processed more than 44 million returns as of late February, agency statistics show. Taxpayers receive an average refund of $3,213, which is more than 4% higher than the average amount in the same period last year.
