By Katie Lobosco | CNN
Washington — When tax filing season opens on January 29, some taxpayers will have the option of filing their 2023 federal tax returns with a brand new, government-run system.
Known as Direct File, the free program will be open on a very limited basis – at first, to federal and state government employees in 12 states with certain tax situations.
The Internal Revenue Service’s plan is to phase in more taxpayers through February and March to include some private sector workers in those 12 states.
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The IRS has built the guided filing system in-house, armed with a massive investment from the Democrat-backed Inflation Reduction Act that was passed by Congress in 2022. The law required the IRS to complete a cost and feasibility study about developing a free, electronic tax filing system, which it released in May. The agency then decided to move forward with a pilot program.
If the pilot program is successful, Direct File could eventually rival competing services in the private market.
The IRS tool is meant to be an additional option people have to file their tax returns and will not replace any existing options for filing, said IRS Commissioner Danny Werfel on a call with reporters Wednesday.
Who is eligible for the pilot
At first, Direct File will be open to some federal and state workers in 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
By mid-March, the IRS expects to open Direct File to some private sector workers in those states who have certain kinds of income and tax situations supported by the tool.
Before starting to file a tax return, Direct File prompts taxpayers to answer screening questions that will determine if they are eligible.
People with income from an employer reported on a W-2, for example, may be…
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