70% Eligible For Free Filing: Why Maine People Should Know Direct File

Tax Filing Just Got a Whole Lot Easier

Direct File System Brings Fairness and Convenience to Tax Filing

The U.S. Treasury‘s new Direct File system is a major step forward in making free filing for their taxes fairer and easier for all Americans. Advocates have pushed for direct and free filing of taxes with the IRS for many years. However, the strong influence of tax prep companies delayed this progress. According to Maine Morning Star, thanks to the Inflation Reduction Act which boosted IRS funding the Direct File system has now been developed. After a successful trial run in 12 states including Massachusetts and New Hampshire in the U.S. Treasury and the IRS have made Direct File a permanent, free option for filing tax returns electronically. This system can save taxpayers both time and money but states must opt in to make it available to their residents.

The for-profit tax prep industry has a history of misleading and exploiting consumers especially targeting low-income and minority communities. Despite the IRS requiring these companies to offer free filing options they often charge users for services that should be free. Research shows that about 70% of tax filers are eligible for free filing but less than 3% actually use it. The Government Accountability Office found many paid tax services make frequent mistakes and hire unqualified staff. These businesses have been sued by several states including Maine for misleading customers. Promising outcomes from the Direct File pilot program allowed 140,000 filers to save millions on tax filing expenses. With features including a chat feature and a mobile alternative users found the system to be straightforward to use. The solution makes filing easier by covering the majority of typical tax scenarios and utilizing data that the IRS already has. The federal government has asked all states to participate in the program after the pilot’s success.

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70% Eligible For Free Filing: Why Maine People Should Know Direct File (PHOTO: Maine Morning Star)

Make Tax Filing Easier and Fairer for Mainers 

Moreover, Maine ought to seize this free filing opportunity as well. By selecting Direct File the state may provide residents with a more straightforward and cost-effective way to file their taxes. Since Maine Revenue Services is actively updating its IT system now is the perfect time to interface with the Direct File system. Mainers may be able to save up to $33 million in preparation costs by obtaining federal tax credits worth between $19 million and $49 million such as the Earned Income Tax Credit and the Child Tax Credit that they might not have otherwise been able to claim. These refunds are crucial for low-income Mainers and nearly a quarter of whom do not file for the EITC. Opting for Direct File would make tax filing fairer and more accessible for all Mainers ensuring they receive the refunds they deserve. It’s a chance Maine should not miss.

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