Good morning. It’s Tuesday, Jan. 30. Here’s what you need to know to start your day.
We’re talking tax filing. Bear with us.
Unfortunately, tax season is upon us once again, and every American with a job will file a return to the Internal Revenue Service, just like every year.
Some of you are patiently waiting for the moment employers send out W-2 forms. But I know others are content to file for an extension and finish this business as late as possible. Maybe even mid-November. But just a heads-up, tax returns are once again due on April 15.
But one thing is changing this year.
The Internal Revenue Service is finally entering the electronic tax filing game, offering taxpayers a new, free and somewhat easier way to file taxes. The L.A. Times’ Jon Healey further explains what this program means for California taxpayers.
Filing taxes for free hasn’t always been easy
Taxpayers whose adjusted gross income was $79,000 or less in 2023 are legally eligible to file for free. Nearly 70% of Californians fall under that limit, and online help is available for preparing and filing their federal returns.
But only a small percentage take advantage of these services, Healey reported.
State and local officials attribute the lack of participation to tax-preparation companies Intuit (maker of TurboTax) and H&R Block and have sued both for tricking taxpayers who are eligible to file for free into paying. These companies also lobbied for decades to prevent the IRS from creating its own online tax filing software, which would threaten the industry’s profits.
The IRS’ new Direct File tool cuts out a middleman
The IRS’ new tool, Direct File, provides many low- and moderate-income households a free online service for preparing and filing their taxes directly with the agency.
This software is the first from the agency that will guide users through the tax filing process step by step. A real-time chat feature will also be available, in which an IRS customer service representative provides answers to basic questions.
There are still a few setbacks:
- For now, it will be available only in California, Arizona, Nevada and nine other states.
- Availability for the program begins mid-March, less than a month before tax returns are due.
- Eligibility for using the program is limited, based on how individuals earn income. For example, those who earn income from a business they own, subcontracting work or gig-economy jobs cannot file.
- Taxpayers using Direct File can claim only a limited list of credits and deductions, including the Earned Income Tax Credit for low-income workers, the credits for children and other dependents, and the standard deduction.
Even with the government “simplifying” the submission of tax returns, it can still be a headache.
Californians cannot use Direct File for state taxes, but California has its own site
California is not one of the handful of states that allows information entered through Direct File to apply to your state tax forms automatically. Instead, the state Franchise Tax Board provides CalFile, offering qualified taxpayers a free online service to file their state tax returns.
CalFile has restrictions similar to Direct File, so if you qualify for Direct File, it’s highly likely that you’ll also have access to CalFile.
Taxpayers eager to use the Direct File program can sign up on the IRS websiteto receive an alert when the program becomes available.
Read more: Did you pay H&R Block for tax help? You may be getting a refund.
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How can we make this newsletter more useful? Send comments to essentialcalifornia@latimes.com.
For your downtime
(Bill Addison / Los Angeles Times)
Going out
Staying in
And finally ... a great photo
Show us your favorite place in California! Send us photos you have taken of spots in California that are special — natural or human-made — and tell us why they’re important to you.
(Amy Brewster)
Today’s great photo is from Amy Brewster of Salinas: Anza-Borrego state park. Brewster writes: Borrego Springs is a small town surrounded by the largest state park in California: Anza-Borrego state park.
Have a great day, from the Essential California team
Anthony De Leon, reporting fellow
Karim Doumar, head of newsletters
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