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My biggest question is "Will this system process EITC?" If so, what proof of eligibility will the site require? I can just see this as a scam in the making, just like the ERC debacle. I am not mad at the concept, I think there is merit to what they are trying to accomplish. For a single W2 earner with a standard deduction I think this is a good solution. But, if the site will process refundable credits, I worry that the IRS will not be able to handle the volume of claims. Count me as skeptical. I just see politicians making it easier and easier for EITC fraud on this site over time. Tom Longview, TX

Pulled “some” money out of IRA? Then there may be “some” left to cover expenses. Hard lesson that many have to learn. Just because customer gives you $100 does not mean you net $100, or in this case, WD of $X does not mean you can spend all of $X. Tough conversation but should be dealt with by whomever assists them with money management, not from their preparer. For me, I hear the “I cannot afford to update my 10 year old computer” or “I cannot afford $79 software “. This is from business owners who need to pay employees. A few times, it is from those preparing payroll for others and say they cannot afford my price. I will have the tough discussion that if <$100 software or <$500 computer update will “really” break them, they need to end their business as it is already broken. Or that they are giving away their services for less than minimum wage, if not free or at a loss.

As long as a taxpayer is fine with lying through their teeth, there will be fraud. Especially with refundable credits, and the less proof required the more fraud there will be.

Tell them they really NEED to file. Else the IRS will send them a bill for FAR more than what you calculated for tax due, and they'll be behind the 8-ball playing catch up with those notices. Whereas if they file, they can then apply for CNC status. Far easier.

The client is a couple. He had a stroke 5 years ago. She had to stay at home to care for him. They have been living off savings and government support. The amount they have been living on is very little. She had to take money from her retirement account early to cover living expenses as her last resort. He is recovering but she is struggling to find work after a 5 year layoff from the workforce. These are not people who have made bad decisions, they have hit hard times. I know when I see clients feeding me BS about their spending habits. This couple is not that. I have known them for nearly 2 decades. Poverty sucks, especially when you live in a very high cost state. Tom Longview, TX

If they truly cannot pay tax, they can be placed in CNC status. Surely they can pay you. I remind people that they still manage to pay for their crap at Walmart. They still pay their TV bill. They still smoke (in some cases). They still can pay you. I'm sorry. I just can't see that anyone is that bad off. If they are filing a return reporting income, they have income. I'm kinda being hard-hearted. Tell them to take it somewhere else.

The official release from IRS gives a lot more detail: https://www.irs.gov/newsroom/irs-advances-innovative-direct-file-project-for-2024-tax-season-free-irs-run-pilot-option-projected-to-be-available-for-eligible-taxpayers-in-13-states Very limited for first year. I don't see why determining EIC would be any different than Turbo Tax type software determining eligibility. I do wonder how they will handle items on W2 that instigate additional forms such as HSA and dependent care benefits. I'm guessing people with these items on W2 will be told they aren't eligible after starting filing.

Probably about a month. They can keep checking the installment agreement IRS site and one day it will show a balance due.

Explain that there are 2 separate penalties, 1 for late filing and 1 for late payment.

Why do people think this will be more prone to fraud than the plethora of online software already available??

When people are struggling financially, their anxiety distorts their decision making. All you can do is listen to them and encourage them to make better decisions by carefully explaining the situation to them. Best Wishes to your clients

We "are" the gubmint. It is a reflection on society. We like to send the same person to DC over and over, 'cause they can send back the most pork.

That really doesn't solve anything because many of those preparers are volunteers with little knowledge of tax law or procedures. I totally stress filing timely even if they cannot pay and let the IRS handle it from there. Not necessarily a good solution; but you have done your due diligence and if they don't want to listen, it is on them. They would definitely be off the client list for the following year.

I agree, for the taxpayer who has a less complicated return or for those who are familiar with tax provisions and filing, more power to them for using this new system. With that said, there are so many potential issues and questions, that's why I asked if 1040-X will be available...it more than likely would get used often.

I respectfully disagree. If I buy stock in a company that only does business in CA, and after a couple years I sell that stock for a gain, and I am not a resident of CA when I sell the stock, I put that gain on my home state return. I don't think the stock is held in CA, I think it is held in OK by the owner of the stock and the gain goes to the OK return. Tom Longview, TX

But, in this case, it's not CA capital gain. If the cap gain was on the K1 as being incurred by the S corp, then yes, it would be taxable in CA. But this is the shareholder's personal capital gain. It's hard to imagine the K1 not showing some income, loss or deductions for CA.

The real funny thing about Social Security increases, is Medicare premiums go up and eats up the cost of living increase. Last year was an exception. I'm assuming Medicare costs will go up this year.

I also seem to have a couple of these clients every year, most retired on a fixed income. I always tell them that, even if they can't pay, to file the return. It's not going to go away by ignoring it and will only get worse. I explain the failure to file penalty of 5% per month of the amount owed, 1/2% a month failure to pay penalty, and the interest. I then urge them (and offer to help them) to set up an installment plan to stop the penalties. I like to follow up the discussion with an email to document that we had the discussion so they can't come back and say I didn't inform them.

I think you are overthinking it Deb. It is just a Cap Gain. If the TP sold shares of his stock in his S Corp for a Gain, would you put it on his CA NR? I don't think so, so I think Drake is doing this correctly. Just thinking out loud....I did not research this (and I am not doing any research for a couple weeks, I am taking a break). Tom Longview, TX

I wonder if the system will also offer a 1040-X option? IRS free tax filing pilot: Taxpayers in 13 states will have access next year to Direct File WashingtonCNN — The Internal Revenue Service is moving ahead with a plan to build its own free tax filing program, known as Direct File, announcing Tuesday that a pilot version will be available to some taxpayers in 13 states next year. Armed with an influx of new money approved by Democrats last year, the IRS is conducting a major overhaul of its operations – despite continued threats from Republicans to cut future funding and even abolish the agency altogether. Eventually, the IRS tax filing system could serve as an alternative to private tax preparation companies like H&R Block and Intuit’s TurboTax. ADVERTISING But for now, the online pilot program will be very limited in scope. Only taxpayers in those 13 states with specific, eligible tax situations will be able to participate. The IRS anticipates that at least several hundred thousand taxpayers will decide to participate in the pilot. IRS cannot find millions of backup tax records, watchdog says Critics of Direct File, including H&R Block and Intuit, argue that a government-run system will likely provide a worse taxpayer experience than what is currently available and that the federal tax collector should not also play the role of tax preparer. “I can’t stress enough that Direct File, if pursued further after the pilot, would be just another choice taxpayers have to help them prepare their tax returns,” IRS Commissioner Danny Werfel said on a call with reporters Tuesday. Taxpayers would still be able to use a tax professional, commercial tax software or the existing Free File program, which is provided by seven different private companies. The Direct File pilot program will help the IRS determine whether it’s feasible to offer a government-run tax filing system to more taxpayers in the future. Who will be eligible for the pilot program? Some taxpayers in Arizona, California, Massachusetts and New York will be eligible for the pilot program during the 2024 tax season that will launch in January. The states have opted to integrate their state taxes with the federal Direct File system. The Direct File pilot will cover only individual federal tax returns. But once a federal return is filed, taxpayers will be guided to a state-supported tool that they can use to file their state tax return. Taxpayers in nine other states that do not levy a state income tax – Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – may also be eligible to participate in the pilot. Washington has also opted to integrate the state’s application for the Working Families Tax Credit with the federal Direct File system so that taxpayers are connected with the state form after filing their federal return. But not every taxpayer in the 13 participating states will be allowed to use Direct File next year. Eligibility will be limited to taxpayers with certain kinds of income that claim specific kinds of credits and deductions. The IRS has not finalized the exact tax situations that will be compatible with the pilot program next year. But Werfel expects those with wages reported on a Form W-2 and who claim tax credits like the Earned Income Tax Credit and the Child Tax Credit will be covered. Overhaul at the IRS The IRS has seen years of reduced funding, resulting in a decrease in both staffing levels and audit rates. But thanks to the Democrats’ Inflation Reduction Act, a sweeping federal spending package that passed Congress in 2022, the agency is set to receive a steady stream of long-term funding to help crack down on tax cheats and transform its operations. The IRS says the money has already helped it improve taxpayer services. In the 2023 filing season, it answered 3 million more calls and cut phone wait times to three minutes from 28 minutes compared with the year before. The IRS has also put a plan in motion to digitize all paper-filed tax returns by 2025. The move is expected to cut processing times in half and speed up refunds by four weeks. The Inflation Reduction Act included a provision to deliver $80 billion to the IRS over 10 years, but Republicans have raised questions about whether the investment would lead to increased audits for average Americans. Earlier this year, Republican lawmakers were able to reclaim $20 billion of the funding in a bipartisan deal to address the debt ceiling. The White House argued that the cut won’t fundamentally change what the IRS can do over the next few years. Biden administration officials have also repeatedly said that taxpayers earning less than $400,000 a year won’t face an increase in audits due to the new funding.

..has probably already been brought to the forum by cbslee, but I understand it will be 3.2%. Wonder what the COLA increase has been for the measurement period. Recipients fight the double-digit increase in medical and drug costs, but they never get this kind of increase in their benefits. With 3.2%, I have to doubt they are even getting a COLA increase. There are other factors in the economy that tend to balance out the small increases. Most of them do not have small children, if they have children at all, they are grown. Also it could be said that most of them own their homes, and are spared the increase in real estate housing costs.

Sounds like a candidate for uncollectible status. I've used this before in these situations. https://www.taxpayeradvocate.irs.gov/get-help/paying-taxes/currently-not-collectible/

It is tough to separate goodwill from those who may or may not know what they are doing (asking for free work). I will often adjust price for animals rescue groups. Usually no for groups I know make money, donations or not. In the op, I don’t read it as they are starving broke, so I would not discount, but I would share resources which may help them resolve or adjust their financial situation.

It's also a matter of degree how they substitute. If chained were used, 2022 COLA would have been 4.9% instead of 5.9%. 2023 would have been 8% rather than 8.7%. 2024 can't be calculated as the chained numbers are not final until a year later. No matter what gauge is used, people will complain. I'm guessing there are some that do so, but I've never personally seen a true pension that increases year after year. Which is better? A 3.2% increase or no increase?

And don't forget self caused issues, such as shielding income from W2 reporting. Zero SS recipients who could have managed their finances to reach SS max contribution get any sympathy from me. I discuss this daily, "why are you hurting yourself and your family by even considering W2 "games" before your SS wages reach the SS max every year?" Of course, there are those who do not believe in SS (and should not complain at all), but for the majority who will claim, belief or not, no complaints are heard from me unless they are collecting at or near the max. My own grandmother collected for just shy of 50 years... and we have planned for our disabled daughter to do the same (SSDI when I get to FRA) for hopefully 40+, plus if I meet my demise early, I will have left my spouse in good SS shape - by not gaming "reasonable compensation".

Both main CPI calculations (W & U) are "chained" which results in a lower percentage increase. So when consumers switch to cheaper products because they can no longer afford what they used to buy, this becomes part of the calculation by swapping in cheaper goods for what we used to be able to buy. It's a death spiral of poverty, brought to you by the millionaires in congress and their wealthy owners.

But, at least here in NY, property taxes rise every year by 3% to 4%! My home owners insurance went up over 20% last year. And, if I can get someone to come out to do repairs, the cost has risen dramatically.

You have to use the date of the submission as the payment date. It usually takes a day or two to get the acknowledgment back from NY, and the money comes within a couple of days.

You don't need an attorney. You need a Patient Advocate or a Health Care Advocate to help your daughter navigate the system.