Doing your taxes in the United States can be famously convoluted. It can also be expensive: on top of paying their tax bills, Americans who have more complicated finances often have to pay for software to help them navigate the US tax code. That might change soon: a report from the Washington Post says that the Internal Revenue Services is preparing to roll out a free direct filing system that will allow Americans to complete their taxes digitally.
The first version of the direct filing system could be available as soon as next year, according to the report, with a pilot program launching for a small group of taxpayers in January of 2024. That would arrive just a year after the IRS publicly started exploring the option, when the tax agency tapped the New America think tank to help explore the feasibility of an agency-run filing program. That effort was kicked off in February of this year, after the Inflation Reduction Act earmarked $15 million to the IRS to research a “multi-lingual and mobile-friendly” free direct e-file system.
That focus on a user-friendly system might be the point. The IRS already offers a Free File Online tool, but according to the Government Accountability Offices, it’s used by less than 3% of eligible taxpayers. If the program is a success, it could make filing taxes easier and more affordable for millions of Americans. If not? Well, TurboTax and H&R Block probably aren’t going anywhere. After all, the US tax prep and filing industry is still worth about $14 billion.