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IRS Direct File to open to all 50 states and D.C. for 2025 tax season

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Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#31

Post by jprete »

t3rabytes wrote: post #3

It seemed like the initial Direct File rollout was limited to states that didn't have a state-level income tax, or directly cooperated with the IRS. Are they forcing all states to play ball, or will Direct File not cover state tax submissions?

Quoting the IRS (https://www.irs.gov/about-irs/strategic-plan/irs-direct-file...):

> The Direct File pilot doesn't prepare state returns. However, if you live in Arizona, California, Massachusetts or New York, the Direct File pilot guides you to a state-supported tool you can use to prepare and file your state tax return.

> If you live in Washington state, Direct File guides you to a state site where you can apply for the Working Families Tax Credit when you file your federal return with the Direct File pilot.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#32

Post by larkost »

t3rabytes wrote: post #3

It seemed like the initial Direct File rollout was limited to states that didn't have a state-level income tax, or directly cooperated with the IRS. Are they forcing all states to play ball, or will Direct File not cover state tax submissions?

From the second sentence of the article:

"will be made permanent for the 2025 tax season with all 50 states and Washington D.C. invited to participate"

It seems very much that this is an opt-in thing, state by state. I would suspect that the results of this will be most Democratic-leaning states at least trying to opt-in for next year, and many Republican-leaning states refusing loudly during this election year, then quietly starting to opt in in a few years.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#33

Post by downut »

bombcar wrote: post #13
jawns wrote: post #12

The Taxpayers Protection Alliance spokesperson quoted at the bottom says: > Private tax services "have every incentive to find the deductions that will yield them the best return," Zupkus said, adding that the IRS wants "to extract as much as possible from the taxpayer." I think it's worthwhile to acknowledge that there are indeed slightly different incentives involved when it comes to the private sector handling tax…

It's not even correct - the IRS wants to follow their rules as closely as they can. I have had the IRS unprompted send me an additional refund because of a mistake I made on my forms, and they caught. (They also included a letter saying that if I thought my mistake was right, I could fight the refund, or file a new amended form and go for a bigger one.)

I have done[1] my own taxes most years over the last 4 decades, but only in the last few years has the Federal IRS fixed my errors for me and sent me more money[2] than I expected. Pretty cool.

I moved house from AZ to GA in 2022 and both State revenue departments refunded me more than what I expected from filling out the partial year forms. GA was almost double[3]. The move included a corporate 6 figure relocation package, with all the fraught income tax issues with that. A lot of anxiety... just dissipated.

[1] I download the pdf forms and instructions and just fill them out, and if I have to I print 'em out and mail 'em in.

[2] I try hard to keep refunds to a minimum, certainly less than $1K.

[3] My partner and I puzzled over the GA instructions for quite some time, which are impressively ambiguous. I could make an argument for 3 different scenarios given the instructions, and we decided to go conservative and use the middle strategy. However the refunded amount did not match any of the scenarios I myself calculated!

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#35

Post by foota »

Someone1234 wrote: post #4

How volatile is this to the political winds? As the article makes clear this was largely done with the support of the current incumbent, but what if the next one is more amenable to TurboTax's ideas? That seems to be an ongoing headache in the US with executive branch created programs, courts can just immediately squish them or political winds can change, then they're suddenly gone. Something like this, in order to b…

I think once it's been in place for a year it will be very hard for them to take it away.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#36

Post by swozey »

nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

The tax system here (usa) is an absolute joke. I owed $5k this year and I literally did nothing different except receive a small 5% raise last year. I have the most basic taxes you can, single, no kids, no house. Literally just a salary paycheck every 2 weeks. Had no idea I would owe anything, much less that much money until I filed 2 weeks prior to our tax date in April and you're expected to pay everything you owe to them on that date.

I sold a house in 2019, I walked away with only about $15k profit after paying everyone. Bought the house for $335, sold for $370ish. I think my principal was around $310k at the sale. I got a letter in 2022 that I owed the IRS something like $150k or so, some shocking amount of money. Freaked me the hell out. I had to dig out all of my paperwork from the sale and send it to them. All of it but, I forget, maybe $100-1k was dropped. I have no idea what their deal with that was. I had a mortgage, paid the mortgage to my mortgage broker, and when I sold it paid the mortgage off to that mortgage broker. Don't they handle that? I don't know, it was my first house sale.

I'm 40, I've never had the IRS annoy the hell out of me until the last 5 years and now I get a letter from them and my heart stops.. Like, what is it now, masters of my w2? Where I have erred today? It feels like they're practically targeting me at this point. I get letters from them and wonder if they're even legitimate so I call in to verify. When I go to the irs.gov site that tells you what you owe, it doesn't even match what any of my letters say. Right now it says I owe money from I think 2016 that was sent to collections and I've never received a letter for that. Collections! For my taxes? That you pull out of my paycheck?? I don't have ANYTHING about that on my credit report. I also have no way to pay it because it's "In collections."

Seeing all of the rich assholes skate by with tax evasion and all of the loop hole work they do, then knowing they're on my ass when I'm just a dude getting a salary just pisses me off so much.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#37

Post by kindatrue »

Covzire wrote: post #11
Someone1234 wrote: post #4

How volatile is this to the political winds? As the article makes clear this was largely done with the support of the current incumbent, but what if the next one is more amenable to TurboTax's ideas? That seems to be an ongoing headache in the US with executive branch created programs, courts can just immediately squish them or political winds can change, then they're suddenly gone. Something like this, in order to b…

Not very, absolutely everyone hates doing their taxes and the whole shady process behind it all. The IRS should have to declare what they think you owe before you pay or submit any paperwork, I don't know if that'll ever happen but any baby or big steps towards that reality will win bipartisan support, easily. Just have to get past the conflicted-out members of congress who are truly being controlled by Turbo Tax and…

"Not very, absolutely everyone hates doing their taxes and the whole shady process behind it all"

That's the Grover Norquist (and Republican) argument for not having IRS Direct File to begin with: if filing taxes becomes easy, people might not hate the IRS and hate taxes.

https://www.propublica.org/article/how-the-maker-of-turbotax...

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#38

Post by phone8675309 »

swozey wrote: post #36
nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

The tax system here (usa) is an absolute joke. I owed $5k this year and I literally did nothing different except receive a small 5% raise last year. I have the most basic taxes you can, single, no kids, no house. Literally just a salary paycheck every 2 weeks. Had no idea I would owe anything, much less that much money until I filed 2 weeks prior to our tax date in April and you're expected to pay everything you owe…

Your company fucked up by not taking withholding from the bonus.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#39

Post by adrianmonk »

bombcar wrote: post #13
jawns wrote: post #12

The Taxpayers Protection Alliance spokesperson quoted at the bottom says: > Private tax services "have every incentive to find the deductions that will yield them the best return," Zupkus said, adding that the IRS wants "to extract as much as possible from the taxpayer." I think it's worthwhile to acknowledge that there are indeed slightly different incentives involved when it comes to the private sector handling tax…

It's not even correct - the IRS wants to follow their rules as closely as they can. I have had the IRS unprompted send me an additional refund because of a mistake I made on my forms, and they caught. (They also included a letter saying that if I thought my mistake was right, I could fight the refund, or file a new amended form and go for a bigger one.)

Similar story here. I had quit my job to return to college full time, but I worked for a few months that year. Turns out that qualified me for the Earned Income Tax Credit.

This credit is supposed to encourage poor people to work instead of living off government assistance. I would have never thought to claim the credit because I didn't think of myself as low income. On a monthly basis, I wasn't. But because of working for part of the year, on an annual basis, for that tax year, I was.

One day I got a letter from the IRS saying essentially, "Hey dummy, why didn't you claim this credit on your return? We fixed it for you. Here's a check."

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#40

Post by kindatrue »

rqtwteye wrote: post #14
CharlieDigital wrote: post #2

> Rep. Brad Sherman (D-Calif.), an accountant and senior member of the House Financial Services Committee, told Axios in April that he wants to go "way beyond Direct File," calling for a "self-populating form." > > "Why in the heck should you have to fill out your return when the government has all the information. They know what's on your W-2 form before you do. They know what's on your 1099 … Do you know how many m…

That's the way it should be. Even the anti-tax people should be for this because it allows people to see what the IRS already knows. That would allow them to request changes as needed. I know people where the IRS had wrong 1099s and it was hard for them to figure out the problem and correct it.

Anti-tax people like Grover Norquist and Republicans who have made his pledge have long been concerned that if paying taxes were easy, then the American people might not despise taxes anymore. So making paying taxes painful is part of the plan.

https://www.propublica.org/article/how-the-maker-of-turbotax...

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