Maryland officials backed a federal effort this week to make the process of filing your taxes “easier, simpler, and more affordable,” according to the governor, but forthcoming program eligibility details will reveal who may benefit.
“Taxes are a part of the glue that keeps our state and our nation together,” said Maryland Comptroller Brooke Lierman, during a Sept. 4 press conference , after listing beneficial uses of tax dollars from funding roads and schools to paying the salaries of law enforcement officers.
“And yet in America, we make it uniquely challenging to pay those taxes and file a return − until now,” she said.
The second-year state tax collector, who was flanked by federal and state officials, including Gov. Wes Moore, Wednesday, indicated that Maryland would join at least a dozen other states in participating next year in the Internal Revenue Service’s Direct File, a program that allows some taxpayers to file their returns online for free through the federal tax collecting bureau.
The Direct File program launched as a pilot earlier this year with individuals allowed to participate in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Enacted as part of the Inflation Reduction Act signed by President Joe Biden in August 2022, the program is set to be utilized in 2025 by individuals in an additional nine states, according to a Sept. 5 post from the Institute on Taxation and Economic Policy, a Washington, D.C.-based, non-partisan tax research organization.
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Eligibility requirements for Direct File program not yet released in Maryland
“After a successful pilot this Filing Season, we are pleased to expand the program as a permanent offering and welcome Maryland as the latest new state to offer this free option to taxpayers,” said United States Secretary of the Treasury Janet Yellen, in a press release .
But while the federal Treasury Secretary indicated more than 700,000 Maryland taxpayers will be able to file their taxes online for free directly with the IRS this coming year, the state and its tax collecting office are still working out some details for participation in the nascent program.
“Eligibility requirement for tax year 2024 (filing year 2025) will be released in January 2025 ahead of tax season,” one of the final lines on a Wednesday press release from the Comptroller’s Office said.
Joe Hughes, a senior policy analyst at the Institute on Taxation and Economic Policy, said Maryland has the benefit of other states having first participated in the pilot, especially as a process for filing state taxes integrates with the federal system.
“Maryland has the advantage of being able to piggyback on the handful of states that developed the program,” said Hughes, in a Sept. 5 phone interview, mentioning New York and California, specifically. “The IRS is not administering the state component of the system.”
But, Hughes said, “it will all be integrated.”
Key to that integration is the non-profit organization Code for America, which has developed a “FileYourStateTaxes” tool , designed to facilitate the free filing of taxes at the state level to complement the federal Direct File tool.
According to a Sept. 6 commentary article in The Baltimore Sun by Lierman and U.S. Rep. Steny Hoyer, D-5th, and U.S. Sen. Chris Van Hollen, D-Md., that work for Maryland with the non-profit organization is still in process.
“The Office of the Comptroller is working with a nonprofit, Code for America, to build a platform that will securely transfer information from a federal tax return to a state tax return,” the article said. A release from the governor’s office said Maryland is the second state to partner with Code for America for the 2025 filing season. New York and Arizona did so in the 2024 filing season earlier this year.
According to an IRS report to Congress on Direct File, 14 states offer direct filing systems for state income taxes. The report from last year contained that information provided by the Federation of Tax Administrators, another D.C.-based center of research on tax administration.
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Joe Starr, a spokesperson for the Federation of Tax Administrators, said the organization has worked with the IRS and the states to “support all free filing options for our nation’s taxpayers,” including Direct File.
“We will continue to provide forums for states to share best practices on free filing solutions in support of state tax administration,” said Starr, in a Sept. 6 email.
The 2023 IRS report to Congress said the vast majority of those who file returns in the U.S. do so with private tax software or by hiring a tax preparer.
Lierman noted in a release: “In countries across the globe, residents enjoy much simpler return-free tax systems.”
Moore called the September announcement about Direct File a “big step forward to make tax season easier, simpler, and more affordable.”
Hoyer, the most senior member of the Maryland congressional delegation, who spoke after the comptroller, governor, and outgoing U.S. Sen. Ben Cardin, D-Md. on Wednesday, also lauded the program. And while the IRS Direct File program is free, he said taxes are “(the) price of our democracy.”
The Comptroller’s website said Direct File will open for the 2025 filing season: “in conjunction with the IRS tax filing season start date, which is currently estimated to be late January 2025.”
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Dwight A. Weingarten is an investigative reporter, covering the Maryland State House and state issues. He can be reached at dweingarten@gannett.com or on Twitter at @DwightWeingart2.
This article originally appeared on The Herald-Mail: Maryland taxpayers can use IRS Direct File next year: What to know about free system
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