Imagine this: Youre sitting at your computer filing your taxes. The tax service youre using says its a free service until you get to the very end and suddenly, you owe some money, even up to a couple hundred dollars. The IRS is offering a service to make filing federal taxes easier and possibly save taxpayers hundreds of dollars.
Step aside, TurboTax and Taxslayer, here comes Direct File, a free service for all taxpayers in California, as long as youre eligible.
So, what is it? Direct File is a new way to file your federal taxes for free, directly with the IRS.
Here are the requirements:
First, lets start with the one were all wondering: whats the income limit? Its $200,000 if you had just one employer, but that number falls to just over $160,000 if you had more than one.
The most important requirement is you need to be filing a basic tax form. Since this is a pilot program, the IRS is offering Direct File to those who dont have any wrinkles on their federal taxes. Having different types of income, credits, and deductions can make you ineligible to use the service.
You may be eligible if you received income via an employer, unemployment, social security benefits, and if you earned $1,500 or less in interest income or US savings bonds or treasury obligations. You are required to take the standard deduction.
You are ineligible if you received any of the following forms:
– 1099-K (income received from payment apps, online marketplaces, or payment cards)
– 1099-NEC (income from independent contractor and gig work)
– 1099-MISC (income from rent, prizes, awards, etc.)
– 1099-R (income from pension and retirement account distributions)
If you need to file alimony thats required to be included in your income, you are also ineligible.
If you have met the requirements, youll need the following while filing: a social security number (SSN) or a taxpayer identification number (ITIN), along with some form of identification like a current drivers license, state ID, passport, or passport card.
There are limitations when it comes to tax credits; you can only receive the earned income tax credit or the child tax credit when using IRS Direct File. You are ineligible with any others.
Remember, this service is for federal taxes only in California, so once youre done filing through Direct File, the IRS will forward you to file your state taxes through a separate program.