New filing system and other changes for Arizonans this tax season
- Arizona is one of 12 states in the pilot test.
Why it matters: The IRS Direct File pilot could reshape how millions of Americans do their taxes and disrupt the multibillion-dollar tax preparation industry.
How it works: IRS Direct File will allow people to file their taxes online for free with step-by-step guidance and live technical assistance.
- During this year's pilot, it will be open only to Arizona residents who are taking the standard deduction and reporting income through a traditional employer (i.e., not an independent contractor, tipped worker or gig worker), unemployment compensation or Social Security benefits.
- Federal and state employees will have access to the program first, CNN reports, and private-sector workers can try the new system starting in March.
The big picture: Regardless of how you file, a few other changes could impact your potential refund.
- Annual tax adjustments, including new tax brackets, an increased standard deduction and higher limits to 401(k) plans are lowering income taxes for many Americans this year.
- Courtney Alev, Credit Karma's head of tax, said since the standard deduction is higher, "taxpayers will need to consider whether it still makes sense to itemize deductions."
By the numbers: 54% of American taxpayers plan to file their taxes early in hopes of getting refunds sooner, according to a new Credit Karma survey of 3,012 adults.
- 31% of taxpayers said they will depend on tax refunds to make ends meet, which jumps to 40% for millennials and 38% for Gen Z taxpayers.
Be smart: April 15 is the tax filing deadline for most taxpayers to file their personal federal returns, pay any taxes owed or request an extension.
- The IRS said it expects more than 128.7 million individual tax returns to be filed by the deadline.
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