July 11, 2024

IRS Secures Free Tax Filing for Five More Years: What It Means for You

Free File Program Extended Through 2029
In a significant move that impacts millions of taxpayers, the Internal Revenue Service (IRS) has announced extending its Free File program through 2029. This five-year agreement with Free File Inc., a consortium of tax preparation software companies, ensures that eligible taxpayers can continue filing their federal tax returns at no cost using online software.
Image Credits: Patrick Semansky/AP Photo

Free File Program Extended Through 2029

In a significant move that impacts millions of taxpayers, the Internal Revenue Service (IRS) has announced extending its Free File program through 2029. This five-year agreement with Free File Inc., a consortium of tax preparation software companies, ensures that eligible taxpayers can continue filing their federal tax returns at no cost using online software.

A Legacy of Free Filing

The Free File program launched 22 years ago, is a hallmark of the IRS’s public-private partnerships. It provides a crucial service exclusively via the IRS website, enabling millions of Americans to bypass traditional, often costly, tax filing methods. “Free File has been an important partner with the IRS for more than two decades and helped tens of millions of taxpayers,” said Ken Corbin, chief of IRS Taxpayer Services, in a press release on May 22. “This extension will continue that relationship into the future.”

Growing Popularity

The program’s usage has surged, with 2.9 million tax returns filed through Free File as of May 11 this year, a 7.3% increase from last year. IRS Commissioner Danny Werfel emphasized its importance: “We were pleased to see growth in the program this year, and we look forward to continuing this important collaboration with the tax software industry.” For the 2023 tax year, taxpayers with an Adjusted Gross Income (AGI) of $79,000 or less were eligible for Free File.

Security and Privacy Standards

The program includes eight private-sector partners, such as TaxAct, TaxSlayer, and TaxHawk (FreeTaxUSA), all of whom must meet rigorous security and privacy standards to protect taxpayer information. Those with an AGI over $79,000 can still benefit from Free File Fillable Forms for preparing and filing federal taxes.

Enhanced Stability and Planning

This multi-year extension provides much-needed stability and planning certainty for the IRS and its private-sector partners. It allows for sustained improvements and ensures that the Free File program remains a reliable resource for taxpayers.

Expanding Free Tax Services

The IRS also highlighted the success of other free tax preparation services. The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs prepared 2.6 million tax returns this season, reflecting a growth of 200,000 returns compared to last year.

The Controversial Direct File Pilot

This year, they introduced the Direct File pilot program, allowing taxpayers in 12 states to file directly with the IRS. The program saw 140,803 participants and received positive reviews from early users. However, it faced significant opposition. Commercial tax preparation software companies like Intuit argue that the service will cost taxpayers billions and undermine existing free options. A coalition of 13 Republican Attorneys General also criticized Direct File, calling it an unnecessary and unconstitutional expansion of IRS authority.

Balancing Innovation and Criticism

Despite the criticism, the IRS continues innovating, providing Americans with accessible and free tax filing options. As these programs evolve, the balance between offering free, user-friendly services and addressing the concerns of private companies and legal entities will be crucial.

Stay tuned as the IRS navigates these challenges and continues enhancing its nationwide services for taxpayers.

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