NYS expands free tax filing option to include residents making up to $200,000
An estimated 3.4 million New Yorkers will be eligible to use the IRS’ Direct File program this year, according to the state. Credit: Newsday
Millions of New Yorkers can file their income tax returns for free this year through an expansion of a joint state and federal program that makes more high-income earners eligible, the state said recently.
Under the expansion, individuals who make up to $200,000, or joint filers who make up to $250,000, may be eligible to use the IRS’ Direct File program, which rolled out last year with 12 participating states, including New York. New credits have been added this year, including the child dependent care credit, but taxpayers cannot claim any credits outside the list provided for by the state and federal program, according to the state Taxation and Finance Department.
An estimated 3.4 million New Yorkers will be eligible to use the tool this year, a million more than were eligible in 2024, said Darren Dopp, a state Taxation and Finance Department spokesperson. Eligible taxpayers could save an average of $260 by using the program and not paying for tax preparation services or software, the state said.
Last year, 14,000 New Yorkers used the free file option, the state said, when a smaller contingent of taxpayers was eligible, with fewer credits to claim and an individual income limit of up to $160,000.
“With Direct File, you can answer simple questions instead of filling out forms or paying a preparer,” state Tax Commissioner Amanda Hiller said in statement. “It’s a safe, secure system that taxpayers can access from a smartphone, laptop, tablet, or desktop computer.”
The form will be available starting Jan. 27, the IRS announced Friday.
The state tool, however, has limitations.
It is not available to many taxpayers, including those who itemize and don’t take the standard deduction, those who receive alimony, those who report capital gains/losses and those who are self-employed, according to the state.
Jeffrey Gentner, executive director of the New York State Society of Enrolled Agents, a 600-member trade group for tax professionals, said the expansion of Direct File doesn’t pose a significant threat to his industry.
“I don’t think it’s going to be dramatic … mainly because most of us do more sophisticated returns,” Gentner said.
He said he recommends Direct File for those who file simple returns, including high school and college-aged children of regular clients.
“It frees up my time to do the more complicated returns,” he said.
TurboTax and H&R Block, which both offer free and premium online tax filing options, say the IRS’ Direct File program is unnecessary given other free options in the marketplace.
Gentner said businesses like TurboTax might be one of those most impacted. Early last year, stock for Intuit, the company that owns TurboTax, fell 6% after the IRS planned to make Direct File permanent.
“IRS Direct File is a solution in search of a problem,” said Tania Mercado, spokesperson for Intuit.
“Today, every American can file their taxes for free, without any cost to the government or taxpayers,” Mercado said.
H&R Block said its free program produced average refunds of $1,500 last year, compared with an average $892 for taxpayers who used Direct File. The company also said its free tool offers more than 40 different tax forms.
Both TurboTax and H&R Block have come under fire from the Federal Trade Commission over their advertising practices concerning how they market their free filing options.
Earlier this week, the FTC ordered H&R Block to pay $7 million to impacted customers and to make changes to its advertising, including telling customers the percentage of those who qualify for free filing.
H&R Block said many of the changes ordered in the FTC settlement are either in the works or have already been made.
In January 2024, the federal agency said Intuit engaged in “deceptive advertising” when marketing its free options since most taxpayers would be ineligible.
The Fifth Circuit Court of Appeals is reviewing the case against Intuit following a hearing on Nov. 4, Mercado said. The company "looks forward to defending itself in front of a neutral arbiter and has always been clear, fair, and transparent with its customers," she said.
In addition to its Direct File program, the IRS has a partnership with the Free File Alliance, a nonprofit coalition of eight tax software companies that provides free tax services for those that qualify.
Only a handful of deductions or tax credits are currently integrated into the state's free filing system. They include: the Empire State child credit, the state child and dependent care credit, the earned income credit, the real property tax credit, and the household credit.
For more information on eligibility, visit the state’s information page.
Millions of New Yorkers can file their income tax returns for free this year through an expansion of a joint state and federal program that makes more high-income earners eligible, the state said recently.
Under the expansion, individuals who make up to $200,000, or joint filers who make up to $250,000, may be eligible to use the IRS’ Direct File program, which rolled out last year with 12 participating states, including New York. New credits have been added this year, including the child dependent care credit, but taxpayers cannot claim any credits outside the list provided for by the state and federal program, according to the state Taxation and Finance Department.
An estimated 3.4 million New Yorkers will be eligible to use the tool this year, a million more than were eligible in 2024, said Darren Dopp, a state Taxation and Finance Department spokesperson. Eligible taxpayers could save an average of $260 by using the program and not paying for tax preparation services or software, the state said.
Last year, 14,000 New Yorkers used the free file option, the state said, when a smaller contingent of taxpayers was eligible, with fewer credits to claim and an individual income limit of up to $160,000.
“With Direct File, you can answer simple questions instead of filling out forms or paying a preparer,” state Tax Commissioner Amanda Hiller said in statement. “It’s a safe, secure system that taxpayers can access from a smartphone, laptop, tablet, or desktop computer.”
The form will be available starting Jan. 27, the IRS announced Friday.
The state tool, however, has limitations.
It is not available to many taxpayers, including those who itemize and don’t take the standard deduction, those who receive alimony, those who report capital gains/losses and those who are self-employed, according to the state.
Jeffrey Gentner, executive director of the New York State Society of Enrolled Agents, a 600-member trade group for tax professionals, said the expansion of Direct File doesn’t pose a significant threat to his industry.
“I don’t think it’s going to be dramatic … mainly because most of us do more sophisticated returns,” Gentner said.
He said he recommends Direct File for those who file simple returns, including high school and college-aged children of regular clients.
“It frees up my time to do the more complicated returns,” he said.
TurboTax and H&R Block, which both offer free and premium online tax filing options, say the IRS’ Direct File program is unnecessary given other free options in the marketplace.
Gentner said businesses like TurboTax might be one of those most impacted. Early last year, stock for Intuit, the company that owns TurboTax, fell 6% after the IRS planned to make Direct File permanent.
“IRS Direct File is a solution in search of a problem,” said Tania Mercado, spokesperson for Intuit.
“Today, every American can file their taxes for free, without any cost to the government or taxpayers,” Mercado said.
H&R Block said its free program produced average refunds of $1,500 last year, compared with an average $892 for taxpayers who used Direct File. The company also said its free tool offers more than 40 different tax forms.
Both TurboTax and H&R Block have come under fire from the Federal Trade Commission over their advertising practices concerning how they market their free filing options.
Earlier this week, the FTC ordered H&R Block to pay $7 million to impacted customers and to make changes to its advertising, including telling customers the percentage of those who qualify for free filing.
H&R Block said many of the changes ordered in the FTC settlement are either in the works or have already been made.
In January 2024, the federal agency said Intuit engaged in “deceptive advertising” when marketing its free options since most taxpayers would be ineligible.
The Fifth Circuit Court of Appeals is reviewing the case against Intuit following a hearing on Nov. 4, Mercado said. The company "looks forward to defending itself in front of a neutral arbiter and has always been clear, fair, and transparent with its customers," she said.
In addition to its Direct File program, the IRS has a partnership with the Free File Alliance, a nonprofit coalition of eight tax software companies that provides free tax services for those that qualify.
Only a handful of deductions or tax credits are currently integrated into the state's free filing system. They include: the Empire State child credit, the state child and dependent care credit, the earned income credit, the real property tax credit, and the household credit.
For more information on eligibility, visit the state’s information page.
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