Anyone aware of IRS Direct File, available to people in some states with relatively simple tax situations? Perhaps it is less likely that parent age posters here will be eligible, but those who are parents of new college graduates whose income types fall into the eligible ones may want to make them aware of it.
The states: AZ, CA, FL, MA, NV, NH, NY, SD, TN, TX, WA, WY
The types of income: W-2 (wages and salaries), 1099-G (unemployment compensation), SSA-1099 (Social Security benefits), 1099-INT (interest income, $1,500 or less)
We’re in AZ and we helped our 2023 college graduate do this for his 2023 return. The hardest part was him setting up the account in the first place, since you have to go through several identity verifications (understandably). But after that it worked well and was pretty easy.
Yeah, I was looking at this for my college student. Unfortunately it appears that IRS Direct File only allows wages and interest income, not dividend income. He had about $25 in dividends, so I suggested he use the free turbo tax instead.
True, it is definitely aimed at the working class with only labor (W-2) and small amounts of interest (1099-INT) income, plus unemployment (1099-G) and Social Security (SSA-1099), at least for now. Of course, this is a very large part of the population.
Probably not most of those talking about investments in the retirement thread, but could include some recent college graduates.
He has owned some stock in an UTMA account for years. It is not a huge account (less money than a typical summer job’s earnings), but when relatives gave him money for his birthday or whatever, he invested in something because he was curious about the stock market. Some of the things he bought have lost value, but the Apple and Nvidia have done OK
My S graduated from college ten years ago & he can use this. He has a real job & he earns about what I would be making if I had not retired. There are more people in this kind of boat than in the yacht the few are enjoying.
Great video. I have often wondered why we need to complete a tax return when the IRS will correct it if we do something wrong. Uh, clearly you guys know what my numbers should be. Just tell me. But then again, if the FAFSA debacle is representative of how our government sets up new computerized systems … no thanks.
In the US, government subsidies of almost anything except for things for people without money are implemented as tax deductions, credits, special rates, special income classes, etc., making the income tax system more complicated. The likely motivation is to make them politically harder to repeal (repealing looks like “raising taxes” instead of “cutting wasteful spending”).
The tax preparation industry obviously wants its cut, and has considerable lobbying and marketing power (as eventually mentioned in the video).
The IRS already has its own internal tax calculation computer programs to check the accuracy of submitted tax returns and match them to documents sent to the IRS (W-2, 1099-*, etc.). So it should be possible for the IRS to provide each taxpayer with a prefilled return that the taxpayer can accept or add to with deduction or credit etc. information not sent to the IRS.
