Starting in 2024, New Tool Will Allow Eligible New Yorkers to File With Government at No Cost
Part of IRS’ Federal Direct File Pilot Program to Make Tax Filing Simpler, Provide Better and More Equitable Access to Refunds for Low-Income Families, and Expand Taxpayer Filing Options
Builds on Governor’s State of the State Commitment to Making Government Work Better for New Yorkers by Improving Access to Government Benefits and Services
More Information Available Here
Governor Kathy Hochul announced that New York State will partner with Code for America on a first-of-its kind direct filing tool to help eligible New Yorkers electronically file their taxes with the New York State Department of Taxation and Finance for free. The announcement follows an update from the Internal Revenue Service that New York, as well as Arizona, California, and Massachusetts, will integrate state e-filing tools with the IRS’ federal e-filing tool as part of a limited, scaled pilot, beginning in 2024.
“Thanks to this first-of-its-kind partnership, New York is taking a major step toward modernizing our tax system and making it even easier for New Yorkers to access their tax benefits,” Governor Hochul said. “No one should have to navigate complex processes or pay out of their own pocket to file their taxes, and starting next year, we’re equipping New Yorkers with a new, innovative, free tool to give taxpayers more choices to file. I am incredibly proud that New York will be one of the first states in the nation to take this bold step, and I look forward to continued collaboration with our partners at the IRS and Code for America to ensure that New Yorkers can make the most of this new tool when it launches.”
New York filing software in 2024 will be built by Code for America, the leading civic tech nonprofit that works with community leaders and governments to build equitable, accessible digital tools and services. Once implemented, eligible New Yorkers will be able to jointly e-file their state and federal tax returns with state and federal tax authorities for free, without the use of tax preparers, promoting better and more equitable access to tax refunds – particularly for low-income families – and making the tax filing process easier than ever.
New York’s partnership with Code for America represents a promising new approach to streamlining state tax filing, building on the state’s leading work to modernize state tax infrastructure. The partnership builds on Governor Hochul’s 2023 State of the State commitment to making government work better for New Yorkers by improving access to essential government benefits and services.
The New York Department of Taxation and Finance will work in close coordination with Code for America’s team of experts to develop the state e-filing tool’s scope, software, and capabilities. Consistent with plans laid out by the IRS, eligible taxpayers will have the option to share their federal return information with third-party state filing software after they have finished their federal returns using Direct File. In New York, Direct File users will be able to share their federal information with the filing tool built by Code for America. Code for America will prepare most of the state return using the federal return data, and most taxpayers will have to answer no more than a few simple questions to complete their New York tax return.
Existing options for free file services for low-income New Yorkers remain in place. For more information on available services see: www.tax.ny.gov/pit/efile
Eligibility criteria for New York’s direct filing tool will largely be determined by the IRS as part of the federal Direct File Pilot. The IRS expects that eligibility will likely be limited to taxpayers reporting certain types of income and claiming certain credits and adjustments. The scope of the pilot is subject to change, but the IRS currently anticipates taxpayers will be able to enter their information about these tax provisions:
- Income Reporting: W-2 wage income, Social Security and railroad retirement income, Unemployment compensation, Interest of $1,500 or less
- Credits: Earned Income Tax Credit, Child Tax Credit, Credit for Other Dependents
- Deductions: Standard deduction, Student loan interest, Educator expenses
New York and Code for America will issue additional information about eligibility in the coming months ahead of the pilot launch.
IRS Direct File Pilot Program
The 2022 Inflation Reduction Act provided the IRS long-term funding for the agency to transform its operations and improve taxpayer service, enforcement, and technology. Projects like Direct File represent a goal of the IRS Strategic Operating Plan, to give taxpayers choices in how they interact with the tax agency. This includes choices in how they prepare and file their taxes, whether it’s through a tax professional, commercial tax software or free filing options. Direct File is one more option to file a federal tax return.
Since the delivery of the Direct File report in May, the IRS has been working to develop a limited pilot for the upcoming filing season, paying special attention to issues identified in the report related to customer support and state taxes. This limited-scale pilot will allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers.
New York, Arizona, California, and Massachusetts will work with the IRS for the initial state integration in the Direct File pilot in 2024. Taxpayers in nine other states without an income tax – Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – may also be eligible to participate in the pilot.
About Code for America
Code for America has been at the forefront of tax simplification work in America, having successfully launched tax filing programs to ensure people in America receive the benefits they are due. Work in this area includes:
- GetCTC, a simplified filing tool that enabled low-income families to e-file streamlined returns claiming the Child Tax Credit and other tax benefits during the COVID-19 pandemic. In 2021 and 2022, nearly 200,000 households claimed an estimated $685 million using GetCTC.
- GetYourRefund, an online service that allows taxpayers to access Volunteer Income Tax Assistance (VITA) services virtually, in partnership with nearly 100 sites across the country.
Code for America’s benefits enrollment research has found that state agencies in both red states and blue states alike are embracing tools, digital technologies, and strategies to streamline and modernize the delivery of benefits and services to millions of people across the country.