IRS to launch new free tax-filing platform in Mass and NH. Here's how it works

The Internal Revenue Service is rolling out its free electronic tax-filing system in 12 states, including Massachusetts and New Hampshire, ahead of the 2023 tax-filing season.

According to the agency, the in-house filing system will first be available in the 12 states as it undergoes final testing before expanding it nationwide at a later date.

“As our transformation efforts take hold, taxpayers will continue to see marked improvement in IRS operations in the upcoming filing season,” IRS Commissioner Danny Werfel said in a statement. “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”

For now, Direct File will only accept federal tax returns, but the IRS will redirect taxpayers to submit their state's supported tool (if one exists) if they wish to file a state return.

The new filing tool is different from the IRS existing Free File program, which allows taxpayers whose income is less than $79,000 to file their taxes for free through participating brand name software. Direct File is open to everyone regardless of income.

The 2023 tax season launches on Monday, Jan. 29 — here's everything you need to know about Direct File.

What are the requirements for Direct File?

If you report any of these items on your tax return, the IRS says you are able to use their free filing tool:

• SSA-1099 Social Security and RRB -1099 railroad retirement income 
• W-2 wage income
• 1099-G Unemployment compensation
• 1099- INT Interest income of $1,500 or less

Taxpayers who also claim credits like the Earned Income Tax Credit, Child Tax Credit or Credit for Other Dependents are also able to file and claim these benefits using the tool, the IRS said.

Deductions such as the standard deduction, student loan interest and educator expenses are also able to be claimed via Direct File.

How does Direct File work?

The agency said Direct File will have a step-by-step checklist approach to filing that will allow taxpayers to go through their returns smoothly.

The tool will also have interactive icons on each screen to help answer common questions, but it will also offer live assistance directly from an IRS Direct File customer service representative if needed.

Once the filing is done, Direct File will show taxpayers a summary of their 2023 federal taxes before sending an email confirmation of the submission, then another email when the IRS accepts the return for processing.

The IRS will then ask users if they want to file state tax returns and redirect them to a state-sponsored tool, if any. For Massachusetts, it will be MassTaxConnect. New Hampshire does not currently offer a state-sponsored tax filing tool.

Direct File does not require any software installation or purchase. It's also mobile-friendly, so users will be able to file their tax returns on a phone or tablet as well as through a computer.

The tool is available in English and Spanish.

How does MassTaxConnect work?

According to the Massachusetts Department of Revenue, people who have lived in Massachusetts for at least a year and have filed a Massachusetts return in the past can file their state tax returns on MassTaxConnect.

To create an online MassTaxConnect account, taxpayers will be asked to provide:

• Amount due from 1 of your last 3 returns.
• Amount to be refunded from 1 of your last 3 returns.
• Line item detail from 1 of your last 3 returns.
• Letter ID from 1 of the following DOR Notices:
  • Attorney General Lien
  • Notice of Account Adjustment
  • Notice of Account ID
  • Notice of Amendment Determination
  • Notice of Assessment
  • Automated Failure to File Notice
  • Care and Custody Initial Bill
  • Final Notice
  • Introducing MassTaxConnect
  • Notice of Change in Tax Return
  • Notice to Collect a Tax Debt
  • Notice of Failure to File
  • Notice of Failure to Register and File
  • Notice of Intent to Assess
  • Notice of Intent to Assess – Request for Information
  • Notice of Paid Family and Medical Leave Registration
  • Payment Agreement
  • Refund Recovery Notice
  • Request for Information – Personal Use Tax
  • Statement of Account 
  • Treatment of Amended Return as Application for Abatement
  • USD Consolidated Bill
  • UST Consolidated Bill

How can I use Direct File?

To use Direct File, eligible taxpayers will need to create an IRS account and verify their identity via the ID.me tool.

To verify your identity, the IRS will ask you to provide a driver's license, state ID, passport or passport card as well as to take a photo of yourself using a smartphone or upload an image of your selected document.

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Taxpayers may choose to verify their identity via live chat to bypass automated biometric collection.

When can I start filing tax returns?

The IRS announced it will officially begin accepting and processing 2023 tax returns on Monday, Jan. 29.

When is the tax filing deadline this year?

The federal deadline for filing 2023 tax returns is April 15 for most filers. However, deadlines vary for state tax returns.

The IRS expects more than 128.7 million people to file individual tax returns this year.