How does the IRS Direct File program work?
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The new system is a free online tool. Taxpayers in the selected states - including California - who have very simple W-2s and claim a standard deduction may be eligible to use it this tax season to file their federal income taxes. The program will also offer a Spanish version, which is already available.
"Traditionally, it takes people about 13 hours to file their taxes, and it costs them on average about $200," said Deputy Treasury Secretary Wally Adeyemo, who said just over 5 million Californians are eligible to use the program.
How do I know if I'm eligible?
You may be eligible if you report these income types on your 2023 federal tax return:
- W-2 wage income
- SSA-1099 Social Security income
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- 1099-G unemployment compensation
- 1099- INT interest income of $1,500 or less
"If you're getting a Social Security check, and you need to file your taxes, you can use Direct File. If you're a teacher, a nurse, a bartender or a fireman, you have a W-2, Direct File is a product that's meant for you," said Adeyemo.
It's important to note that the Direct File program is for federal income taxes only. Depending on your situation, you may have to file a California state tax return in addition to your federal tax return, according to the IRS.
If you choose to use Direct File for your federal taxes, you may qualify to use California's free CalFile tax application to file your state taxes separately. Your federal tax information can't be transferred automatically from Direct File to California's state tax tool.
Will this free program help me get more money from my return?
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Adeyemo said there's a calculator available on the Direct File program's website that will help you determine if you're eligible for things like the child tax credit or the earned income tax credit.
"... If you are eligible, it's money the federal government is going to give you to help you support your children, support your family," said Adeyemo.
The IRS said it's hoping to expand the Direct File program in years to come, allowing for more taxpayers to become eligible to use the free service.
It's part of the agency's effort to build out a new government service that could replace some taxpayers' use of commercial tax preparation software, such as TurboTax. It's meant to be simple and provides a step-by-step walkthrough of easy-to-answer questions.
ABC News contributed to this report.