Pre-populated tax returns may be possible, research shows
The IRS is preparing to test a free online direct filing system for some taxpayers — and while pre-populated returns with certain details already filled in aren't part of the initial plan, research shows it may be possible for certain filers.
As directed by the U.S. Department of the Treasury, the pilot program will launch during the 2024 filing season for some taxpayers to assess the platform's broader viability.
"We do not expect pre-population or pre-determining tax obligations to be part of it," IRS commissioner Daniel Werfel told reporters on a press call Tuesday, noting the project's limited scope.
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However, the IRS may have the future ability to pre-populate nearly half of tax returns, according to a 2022 working paper from the National Bureau of Economic Research.
It's possible the agency could correctly auto-fill an estimated 62 million to 73 million returns with information it already has, which would cover 41% to 48% of taxpayers, researchers from the Treasury Department, the Minneapolis Federal Reserve and Dartmouth College found.
The paper was based on a random sample of roughly 350,000 individual tax returns from 2019, and accuracy was highest among low- to moderate-income filers. Errors were more likely to occur as itemized deductions increased.
Source: CNBC
