New York State to launch free e-file tax prep service to pair with IRS Direct File

This tax season, New Yorkers will be among the very first in the country to access free new online tax prep tools to file both their state and federal taxes.

New York’s FileYourStateTaxes service, announced Wednesday by Gov. Kathy Hochul, will launch March 12 and pair with the federal government’s pilot Direct File program.  Together, they’re expected to provide user-friendly alternatives to commercial e-file services like Intuit’s TurboTax that can cost taxpayers hundreds of dollars for their annual returns.

“Filing your taxes should be free and simple,” Hochul said in a statement accompanying the announcement. “New York is delivering on its commitment to helping New Yorkers access vital government services, meet their tax obligations, and recover tax benefits.”

New York is one of 12 states that were selected to have early access to Direct File, which the IRS launched earlier this year, and it’s one of only three states (along with Arizona and Massachusetts) that developed an integrated state companion version.

Both the state and federal tools have gone through multiple rounds of testing over the past several months. In their first year, eligibility is restricted to those taxpayers who have only limited sources of income and relatively simple tax situations.

You’re most likely to be eligible for the federal and state tools if you:

• Lived in New York all year,
• Do not have income from another state,
• Report income that’s limited to W-2 wages, Social Security benefits, unemployment benefits and no more than $1,500 in interest income.
• Limit your tax credits to just the Earned Income Tax Credit, Child Tax Credit or credits for other dependents.
• Claim the standard deduction

Here’s how the tax tools are expected to work:

Users should start their federal returns on Direct File by going to directfile.irs.gov.  Once they complete the process, they’ll be prompted to export their information to the FileYourStateTaxes tool, which will launch automatically and enable them to complete their state return within minutes.

If you have questions about Direct File or FileYourStateTaxes, state authorities said users should go here: tax.ny.gov/pit/efile/direct-file/

Besides the new e-file tools, New Yorkers also have other low-cost options for filing their taxes. New York works with tax prep companies such as OnLine Taxes, TaxSlayer and FreeTaxUSA to make free e-file services available using their software for low-income filers. You can find more information about those low-cost alternatives here: tax.ny.gov/pit/efile/