- As part of the Inflation Reduction Act, the IRS will receive funding to research the feasibility of creating a free electronic tax-filing program.
- If a free federal tax-filing program were available to all Americans, it would result in significant savings for workers.
Will a free electronic tax-filing service for all exist someday? Maybe.
Tax season can be very stressful regardless of your job, income level, or life story. Filing your tax return is a process that takes time and effort. Many Americans pay a fee to file their taxes -- even those that use online software to get the job done. But what if there was no fee to file?
While no one loves paying taxes, it's a part of life. Federal taxes, state taxes, local taxes, and property taxes are some of the taxes many Americans pay throughout the year.
We're responsible for filing our federal tax returns and paying our tax dues each April.
Because of the stress of the filing process, many Americans wait until the last minute to file their tax returns. Some use online tax preparation software to make the job easier.
While free tax-filing solutions are available, many have strict eligibility requirements.
Unless your income falls under a certain level or you qualify for free tax-filing services another way, you'll probably pay a fee to file your federal taxes.
Those fees add up year after year and they impact your budget.
The good news is changes may be coming, thanks to newly passed legislation.
The IRS will be required to study free tax-filing solutions
The newly passed Inflation Reduction Act includes improvements that will help many hard-working Americans save money.
It also includes funding that will allow the IRS to do its job more efficiently.
As part of the bill, the IRS will receive $15 million to fund a task force to study the cost and feasibility of creating a free, direct electronic tax-filing program. If they're successful at creating such a program, that could help many Americans keep more money in their pockets.
While a federal electronic filing program exists, known as the Free File Program, this service is only eligible to low to moderate-income Americans.
Many taxpayers aren't aware of this free filing service. In 2020, only about 4% of eligible individual taxpayers used the program -- which is about 3% of all individual taxpayers.
It would be nice if more taxpayers could benefit from easy, free electronic filing solutions. Without such solutions, Americans continue to give money to tax preparation companies.
Don't pay tax-filing fees before first checking eligibility
April may feel far away -- but tax season will be here before you know it.
If you're used to paying tax prep and tax-filing fees, you may be able to save some money by using the existing Free File Program or other free tax preparation software services.
For the tax year 2021, individual taxpayers with an adjusted gross income of $73,000 or less were eligible to use this free service. By using this service, you could save and put extra money toward debt payoff or other financial goals.
Hopefully the IRS will be able to develop a better system that could eliminate stress, as well as save time and money for Americans.
Are you looking for tips to help you save money and prioritize your personal finance goals? Check out these personal finance resources for more guidance.
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