5 Reasons Why IRS’ Direct e-file Won’t Make Filing Taxes Any Easier
The Internal Revenue Service (IRS) has announced that it will launch a new direct e-file option for individual taxpayers in 2024. This option will allow taxpayers to file their federal income tax returns directly with the IRS through its website, without using any third-party software or service.
The IRS claims that this option will make filing taxes simpler, faster, and more secure for millions of Americans. However, there are several reasons why this option may not be as beneficial as it sounds. Here are five of them:
1. It may not be free for everyone
According to the IRS, its direct e-file option will be free for taxpayers who meet certain income and eligibility criteria. However, it has not yet specified what those criteria are, or how many taxpayers will qualify for them. In contrast, the IRS already offers a Free File program that allows taxpayers with an adjusted gross income of $73,000 or less to use commercial tax software for free.
The Free File program also provides free fillable forms for taxpayers who are comfortable doing their own taxes. Therefore, the direct e-file option may not be much of an improvement for low- and moderate-income taxpayers who already have access to free filing options.
2. It may not be compatible with state tax returns
The IRS says that its direct e-file option will allow taxpayers to file their federal and state tax returns together in one submission. However, it has not yet explained how this will work, or which states will participate in this option. Currently, most taxpayers who use commercial software or online services can file their federal and state tax returns together, and pay any fees or taxes due to both jurisdictions at once. The direct e-file option may not offer the same convenience or functionality for taxpayers who have to file state tax returns.
3. It may not offer enough support or guidance
The IRS also says that its direct e-file option will provide taxpayers with easy-to-use tools and instructions to help them complete their tax returns accurately and efficiently. However, it has not yet demonstrated how these tools and instructions will compare to those offered by commercial software or online services.
Many taxpayers rely on these products to help them navigate the complex tax code, claim deductions and credits, avoid errors and audits, and get answers to their questions. The direct e-file option may not offer the same level of support or guidance for taxpayers who need assistance or advice with their tax situations.
4. It may not protect taxpayer data or privacy
The IRS assures that its direct e-file feature employs state-of-the-art technology and security measures to safeguard taxpayer information and confidentiality. However, it has not yet revealed how it will do so, or how it will prevent data breaches, identity theft, fraud, or phishing attacks.
The IRS has a history of cyberattacks and data leaks that have compromised millions of taxpayer records and personal information. The direct e-file option may not offer the same protection or assurance for taxpayers who are concerned about their data or privacy.
Cyberattacks have become increasingly common in recent years, and taxpayers’ information in the USA is no exception. These attacks can be devastating, as they often involve the theft of personal and financial information, such as social security numbers and bank account details. The consequences for affected individuals can be severe, ranging from identity theft to financial ruin.
Therefore, it is important for the IRS to provide assurances to taxpayers that their new system will be waterproof. More so, taxpayers themselves should take steps to protect their information, such as using strong passwords, regularly monitoring their credit reports, and being cautious of suspicious emails or phone calls regardless of the platform they use to file their taxes. Besides the IRS, it is also crucial for government agencies and businesses to prioritize cybersecurity measures to prevent these attacks from occurring in the first place.
5. It may not improve customer service or satisfaction
The IRS says that its direct e-file option will improve customer service and satisfaction by reducing processing time, increasing accuracy, and providing faster refunds. However, it has not yet proven how it will achieve these goals, or how it will measure them.
The IRS already faces challenges in providing timely and quality service to taxpayers who call, write, visit, or file electronically. The direct e-file option may not improve customer service or satisfaction for taxpayers who encounter problems or issues with their tax returns. This could be a huge issue for taxpayers grappling to catch the filing deadline amidst mistakes that require clarification.
Conclusion
The IRS’ direct e-file option may sound like a good idea in theory, but it may not be so in practice. Many factors affect how easy or hard it is to file taxes, and the direct e-file option may not address them all. Taxpayers should weigh the pros and cons of this option carefully before deciding whether to use it or not. They should also compare it with other existing options that may suit their needs better. Filing taxes is never fun, but it doesn’t have to be harder than it needs to be.
Contact my office at 202-618-1297 if you need any help with your taxes.
Frequently Asked Questions
- What is an e-file?
E-file is short for electronic filing. This refers to the method of submitting tax returns or other official documents to the relevant government agencies through the internet. Instead of filing paper forms, individuals and businesses can use electronic methods to securely and efficiently transmit their information.
- How do I get an e-filing?
To e-file, you typically need to use an authorized electronic filing service provider or tax software. There are various options available, including popular tax preparation software. These software programs guide you through the tax filing process and help you accurately complete your tax forms. Once you’ve filled out the necessary information, the software will facilitate the electronic submission of your tax return directly to the Internal Revenue Service (IRS) or state tax authorities.
Furthermore, starting next year, the Internal Revenue Service (IRS) will allow taxpayers to e-file directly to them. With this new development, the IRS claims that taxpayers can be assured that their tax returns are being filed directly to the IRS, ensuring a more efficient and secure process. But skeptics have raised some concerns such as loss of tax deductions and credits for taxpayers who can’t get these without professional assistance.
- What is the purpose of E-filing?
The primary purpose of e-filing is to streamline the process of submitting important documents, such as tax returns, to government agencies. E-filing offers several benefits to taxpayers:
a. Faster processing: E-filing reduces the time it takes to process tax returns compared to traditional paper filing. This leads to quicker tax refunds if applicable or faster acknowledgment of tax payments.
b. Increased accuracy: E-filing software often includes built-in error checks, reducing the likelihood of mistakes on your tax return. This helps ensure that your tax forms are completed correctly, minimizing the risk of IRS audits or delays.
c. Secure and efficient: E-filing uses encryption and other security measures to protect sensitive personal and financial information, making it a safe way to transmit sensitive data.
d. Environmental impact: E-filing reduces paper usage, contributing to environmental conservation efforts.
Overall, e-filing is designed to simplify and expedite the process of submitting important documents while providing a more user-friendly experience for taxpayers.
- How does e-filing work?
When you choose to e-file your tax return or any other official document, the process typically follows these steps:
a. Gather necessary information: Collect all the required documents and financial records needed to complete your tax return accurately. This may include W-2s, 1099s, receipts, and other relevant forms.
b. Choose an e-filing method: Select a suitable e-filing service provider or tax preparation software to help you through the process. Ensure that the software is authorized by the IRS or other relevant government agencies.
c. Enter your information: Use the software to enter your personal details, income, deductions, and credits. The software will guide you through the necessary questions to complete your tax return correctly.
d. Review and verify: Double-check all the information you’ve entered for accuracy and completeness. The software will often run error checks to catch any potential mistakes.
e. Submit your e-file: Once you are confident that all the information is accurate, you can electronically submit your tax return through the software. The software will securely transmit your return to the IRS or appropriate state tax authorities.
f. Receive confirmation: After successfully submitting your e-file, you should receive a confirmation of receipt from the IRS or state tax agency. This confirms that your tax return has been received and is in process.
Remember that e-filing is not only applicable to tax returns but can also be used for other official documents like extensions, amended returns, or any other filings required by government agencies.
