Don't Like Paying TurboTax? New Free IRS Filing Service Available In MA

MASSACHUSETTS — Filing federal returns might be free for many Massachusetts residents this tax season.

The IRS this week said it will launch a new pilot program allowing taxpayers in up to 13 states to file returns online for free before April. The four main test states in the pilot are Massachusetts, Arizona, California and New York, whose residents will be able to complete simple returns online for free with no income limit.

The initial pilot will be limited to select residents for the upcoming tax season. The IRS has not released details on those eligibility requirements.

"Taxpayer eligibility to participate in the pilot will be limited by the state in which the taxpayer resides and will be limited to taxpayers with certain types of income, credits and deductions — taxpayers with relatively simple returns. The IRS today announced it anticipates specific income types, such as wages on a Form W-2, and important tax credits, like the Earned Income Tax Credit and the Child Tax Credit, will be covered by the direct file pilot," the IRS said in a news release.

Each tax season, millions of Americans pay companies like TurboTax for the ability to file online. Taxpayers under a certain income limit — last season it was an adjusted gross income of $73,000 — can file online for free through companies like TurboTax, TaxAct and FreeTaxUSA.

Paying for services like TurboTax can cost between $60 and over $400 depending on the level of service required by the filer, with separate charges for state and federal filing. The IRS estimates the average filer spends 8 hours and $140 filing taxes each year.

Intuit, the company that makes TurboTax, fought for years to keep tax filing in its domain, according to ProPublica. The report found the company's lobbying efforts have kept taxes complicated for Americans, preventing changes like automatic pre-filing for taxpayers based on payroll data that the IRS already possesses.

The IRS' new free filing tool was funded through the Inflation Reduction Act, which was signed by President Joe Biden in August 2022. The legislation directed the IRS to produce a report on setting up its own filing system. A poll conducted by the agency found that about 73 percent of filers wanted a free IRS online tool.