Still need to file your taxes? Free Direct File service offered in TN
Tax Day is almost here and Internal Revenue Service Commissioner Danny Werfel has a few pointers to help ease any lingering anxiety as the deadline approaches.
Werfel recently visited The Commercial Appeal office during a statewide media tour to discuss new initiatives such as the Direct File software, explain how the IRS is modernizing and, of course, offer taxpayers some guidance ahead of Tax Day on Monday, April 15.
“It is kind of a misunderstood thing, people think the IRS is trying to get every dollar we can,” Werfel said. “It is just not the case. We don't want anyone to pay a penny more and get the refunds they're entitled to.”
Direct File: What is it and can Tennessee residents use it?
The IRS launched its Direct File pilot program on March 12, and Tennessee is among 12 states where residents can access the free filing software.
The pilot is limited to simple returns. People who are interested in Direct File should go to directfile.irs.gov. Users have to go through a quick survey to see if they are eligible to use the service. They can also visit a walk-in center or call and speak with an IRS representative to help them through the process. ( (The Shelby
County office is located at 167 N. Main St., Room 101 in Downtown Memphis.) The filing process has averaged under 60 minutes, Werfel said.
Werfel said the program, which has a target usage around 100,000 filers between the 12 states, is getting positive feedback from users. The goal is to use that data to improve and possibly expand the program going forward.
Will Direct File replace third-party services such as Turbo Tax?
The short answer is no.
The service, while still limited, is designed to be an option for taxpayers. Werfel said he doesn't see third-party services as competition and acknowledged they help provide additional choices for taxpayers.
“I definitely do not want them replaced. They're important partners,” Werfel said. “They help us run an effective tax system. We work very closely with them to make sure their software solutions are robust, reflecting with the changes in the tax code.”
What about audits? Will chances of being audited increase in 2024?
For the most part, your chance of being audited depends on your household income.
Audit rates will remain low for those who have a household income below $400,000, with audit rates will be higher for those who have larger and more complex filings.
Audits will focus on millionaires, billionaires, corporations and complex partnership. Since 2010, the tax system has gotten more complicated, Werfel said. With the arrival of the gig economy and increased globalization leading to more large, multinational companies doing business in multiple tax jurisdictions. Part of the enforcement will be monitoring transfer pricing.
“We have to have an eye on the ball of whether those companies are reporting appropriately the profits and income they are receiving in the U.S. or they are inappropriately shifting that to a different country's jurisdiction where they'll get a more favorable tax rate,” Werfel said. “And that is not legal under the U.S. tax laws. If you earn income in the U.S. and profit, it is taxable. And that's not decided by the IRS, it is decided by Congress.”
What if you haven’t filed your 2024 tax return yet?
“Take the time to do your tax responsibilities before Monday at midnight. Look at the various options you have to file, including Direct File,” Werfel said. “If you can't do tax obligations by Monday, file an extension.”
Werfel said the extensions can be filed, but to keep in mind that the extension is to file not balance due, so if a taxpayer owes on this year's return they will still owe by the April 15 deadline. Taxpayers who owe can sign up for a payment installment program if needed.
The good news is that 8 out of 10 Tennesseans receive refunds. Werfel urges residents to file electronically and via direct deposit. Those returns have been getting out within 21 days, he said.
For anyone still waiting on their return, the best way to track is visiting the “Where's my Refund?” tab on the IRS website.
Additionally, Werfel said roughly 20,000 Tennessee taxpayers have yet to file 2020 returns. He said, there's no penalty for filing if you have a return; there's only a penalty if you owe.
Neil Strebig is a journalist with The Commercial Appeal. He can be reached at neil.strebig@commercialappeal.com , 901-426-0679 or via X: @neilstrebig.