Feb 5, 2024 - News

New filing system and other changes for Arizonans this tax season

Illustration of a sign pointing in multiple directions featuring text from tax forms

Illustration: Sarah Grillo/Axios

The Internal Revenue Service kicked off tax season Jan. 29 — six days later than last year — with a few changes and the rollout of the government's new pilot tax filing service.

  • 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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