Starting in January 2025, Pennsylvanians will be able to file their taxes through a new, free IRS online tool, state and federal officials announced Tuesday.
Pennsylvania becomes the latest state to participate in the IRS Direct File program, which was initially launched as a pilot during the 2024 tax season.
The pilot program involved more than 140,000 Americans participating and claiming more than $90 million in refunds. The IRS said the taxpayers saved an estimated $5.6 million in tax preparation fees on their federal returns alone.
The announcement in Philadelphia was made by Democratic Governor Josh Shapiro, Treasury Secretary Janet Yellen, and other officials.
“Direct File will save Pennsylvania taxpayers time and money and help ensure they receive the tax benefits for which they are eligible,” said Yellen.
“Filing your taxes should be free and easy – that’s why we’re improving our digital services and adopting IRS Direct File here in Pennsylvania,” said Shapiro.
IRS Direct File is designed to integrate with myPATH, Pennsylvania’s existing free tool for filing state income taxes and applying for tax credits and rebates.
Pennsylvania Secretary of Revenue Pat Browne said there will be financial and time savings for Pennsylvanians who are able to use IRS Direct File.
“We know from our experience that many Pennsylvanians spend a lot of time and money every year to ensure their personal income tax returns are filed timely and accurately. That’s why we’re eager to bring Direct File to Pennsylvania, because it will be a free and simple online filing tool that will relieve stress and a financial burden for many of our taxpayers,” said Browne.
The program is set to initially enable qualifying taxpayers to complete their 2024 federal tax returns. It will direct users to myPATH to finalize their state tax filings. Essential data, such as W-2s and demographic information, will automatically transfer to the state return, eliminating redundant data entry, according to state and federal officials.
For many residents with basic tax filings, accountants or software can be an added cost. One survey found the average American spends $270 to file their taxes.
According to ProPublica, tax-filing companies have invested millions in lobbying efforts to block the IRS from providing free tax preparation services. Although these companies have agreed with the IRS to provide free software for lower-income earners, journalists at ProPublica discovered that the software is often buried deep within their websites and challenging for users to find.
Republican Congressmen Adrian Smith and Chuck Edwards recently introduced a bill to stop free filing programs from the IRS. They argued that such programs waste taxpayer funds and lack statutory authority.
Eligibility for Direct File is primarily geared towards taxpayers with straightforward financial situations, including W-2 wage income and certain other types of income, with income thresholds specified for different filing statuses, according to NJ.com.
The IRS reports a high degree of user satisfaction with the pilot program, and noted the absence of hidden fees or upsell tactics, which are common in for-profit tax preparation services.
As the program expands, the goal is to offer a free filing option to a broader range of taxpayers across the nation, officials said.
The Direct File program was created through a prevision in the Inflation Reduction Act, which allocated money for the IRS to develop and implement the electronic filing system.
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