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Has anyone tried the IRS Direct File program this year? I heard they expanded it to more states for 2025 filing season. Wondering if it works better than dealing with OLT or TurboTax.
I used it last season and it was surprisingly good! Very basic interface but it gets the job done with no upsells or hidden fees. The downside is it only works for pretty simple tax situations - W-2 income, standard deduction, some basic credits. If you have self-employment income, investments beyond basic interest, or itemize deductions, you can't use it yet.
This is exactly why I always bookmark the official IRS Free File page (https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free) at the beginning of tax season. These companies count on people going directly to their commercial websites where they can charge for "premium" features. What's really frustrating is that OLT's marketing emails don't even mention that their completely free version is still available through the IRS portal. They're deliberately steering people toward their paid service. I fell for this exact trick with H&R Block a few years ago before I learned about the Free File program. Pro tip: If you qualify for Free File (AGI under $79,000 for most providers), bookmark that IRS page and ONLY access tax software through those links during filing season. Don't trust the "free" versions on company websites.
This is such a helpful tip! I had no idea there was a difference between the IRS Free File portal and going directly to the company websites. I've been getting charged for state returns for years thinking that was just normal. Does the $79,000 AGI limit apply to all the companies on the Free File list, or do some have different thresholds?
Slightly different question - I'm a union electrician and I get travel pay which is different from per diem. My company is also including that in my W-2 Box 1. Is travel pay also supposed to be non-taxable, or is that different from per diem?
Travel pay is generally taxable - it's treated as additional wages unless it meets specific criteria. What's non-taxable are certain reimbursements for business expenses. Per diem for lodging, meals, and incidentals when you're away from your tax home overnight = potentially non-taxable if handled correctly VS. Pay for time spent traveling from home to various job sites = almost always taxable as regular wages Your union contract might have specific provisions, but IRS rules usually consider travel pay as taxable compensation.
This is such a common issue in construction! I went through the exact same thing with my roofing company last year. The key thing to understand is that your per diem CAN be non-taxable, but only if your employer is handling it as an "accountable plan." This means: 1) The per diem rates don't exceed federal GSA rates for your work locations 2) You provide adequate documentation of your travel (dates, destinations, business purpose) 3) You return any excess amounts you don't use If your company just gives you a flat $135/day regardless of where you travel, and some locations have lower federal rates, the excess becomes taxable. Also, if they don't require you to document your travel or return unused amounts, the IRS considers it a "non-accountable plan" and the entire amount becomes taxable wages. Check the GSA per diem rates for your specific work locations at gsa.gov/perdiem. If your $135/day exceeds those rates, or if your company isn't following accountable plan rules, then yes - it should be included in your W-2. But if everything checks out and it should be non-taxable, definitely push for a corrected W-2. Don't try to handle this on your tax return yourself - that's a red flag for audits.
This is really helpful, thanks! I'm new to all this tax stuff and didn't realize there were so many specific rules around per diem. Quick question - when you say "adequate documentation of travel," what exactly does that mean? My company has me fill out a weekly timesheet that shows which job sites I worked at and the dates, but they don't ask for receipts or anything like that. Is that enough documentation, or do I need to be keeping more detailed records?
Thanks everyone for the helpful responses! This clears up my confusion. I was hoping the IP PIN would simplify things but sounds like I need to be prepared for both. Really appreciate the detailed explanations - makes sense that they serve different security purposes even though it's frustrating to deal with multiple layers.
Same here! Just got my first IP PIN this year and was hoping it would streamline everything. At least now I know what to expect - thanks for asking this question, saved me from being caught off guard!
Just to add some clarity from someone who's been through this multiple times - the IP PIN is basically your "password" to file, while identity verification is like showing your driver's license. Even with the PIN, if the IRS system flags something unusual about your return (could be income changes, new deductions, etc.), they'll still ask you to verify. It's annoying but it's actually protecting you from having someone else successfully file a fraudulent return even if they somehow got your PIN. The good news is once you verify successfully, it usually gets easier in future years.
That's a really helpful analogy! The password vs driver's license comparison makes it so much clearer. I was wondering what could trigger the verification request even with an IP PIN - knowing it could be things like income changes or new deductions helps me understand why the system might flag my return. Appreciate you sharing your experience!
This is such a common issue this year! I'm a tax preparer and I've seen dozens of clients with the exact same situation - people who always got state refunds suddenly owing hundreds or even over $1000. The main culprits are usually: 1) State withholding table changes (which many states implemented without much fanfare), 2) Your freelance income pushing you into a higher state tax bracket or affecting credits, and 3) Loss of state tax credits due to income thresholds. For your $2,500 freelance income, you'll need to pay California state income tax on that amount (likely around 6-9% depending on your total income), plus it might have pushed you out of certain state credits or into a higher bracket for some of your other income. My advice: Pull up your prior year California return and compare it line-by-line with this year's. Look specifically at your state withholding amounts, any credits you claimed last year vs this year, and your effective tax rate. This will show you exactly where the difference is coming from. Also submit a new DE-4 form to your employer to increase your California withholding for next year - better to get a smaller refund than owe $780 again!
This is so helpful, thank you! As someone new to dealing with freelance income, I had no idea that even $2,500 could cause such a big swing. The line-by-line comparison idea is great - I'll definitely do that to see exactly where the difference is coming from. Quick question: when you mention the DE-4 form for California withholding, is there a way to calculate roughly how much extra I should have withheld to avoid owing again next year? I'm planning to do more freelance work in 2024 so I want to get ahead of this problem!
Great question! For California, you can use the state's withholding calculator on the FTB website, but here's a rough rule of thumb: if you expect to make similar freelance income next year ($2,500+), you should probably increase your withholding by about $200-250 to cover the state tax on that income. However, since you mentioned planning to do MORE freelance work in 2024, I'd suggest calculating 8-10% of your expected total freelance income and divide that by the number of pay periods to get your additional withholding amount. So if you think you'll make $5,000 in freelance income next year, set aside about $400-500 in additional state withholding throughout the year. You can also make quarterly estimated tax payments directly to California FTB if you prefer that approach over increasing payroll withholding. Some people find it easier to manage their freelance taxes separately this way.
I'm dealing with this exact same situation! I'm in Texas and suddenly owe $520 to the state when I've gotten refunds for the past 4 years. Like you, nothing major changed - same job, same filing status. The only difference is I started doing some part-time tutoring that brought in about $1,800 throughout the year. What's really frustrating is that I compared my paystubs and my state withholding did seem slightly lower this year, but I just assumed it was because of some minor payroll system update. Now I'm wondering if Texas also changed their withholding tables like some of the other states mentioned here. I'm definitely going to try that line-by-line comparison suggestion from the tax preparer above. It's so annoying that these changes happen without clear communication to employees. Thanks for posting this - at least now I know I'm not the only one going through this!
Wait, I'm confused - Texas doesn't have state income tax, so how are you owing $520 to the state? Are you maybe referring to a different state where you have tax obligations, or could this be a different type of state tax like property tax or something else? Just want to make sure we're all talking about the same issue since the original post was about state income tax specifically.
Sean Murphy
Fatima, I completely understand how frustrating this must be, especially when you're planning those home repairs! The 570 code can definitely cause anxiety when you're not sure what's happening. Your situation with all dates being 3/4 is actually pretty encouraging - when everything matches like that, it usually means an automated system review rather than someone manually pulling your file. These automated reviews typically resolve much faster. Since you mentioned being retired, this is very likely just the IRS double-checking your retirement income against their records - pension distributions, 401k withdrawals, Social Security, etc. It's routine verification but unfortunately takes time. Based on what I've seen in this community, most 570 codes with identical dates like yours resolve within 2-3 weeks without any action needed. I'd check your transcript again around March 18th for either a 571 (hold released) or 846 (refund issued) code. Keep watching your mail too - if a 971 code shows up, it means they sent a notice, but often these are just informational rather than requesting anything from you. Try to hang in there! Your refund is coming, it's just taking a detour through verification. Those home repairs will happen soon!
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Oliver Becker
Fatima, I completely understand your frustration - waiting for a refund when you have specific plans for it like home repairs makes the uncertainty so much worse! The 570 code you're seeing is essentially the IRS hitting a "pause" button on your refund while they verify something. What's actually encouraging about your situation is that all your dates are identical (3/4) - this typically indicates an automated system review rather than a manual audit, and automated reviews usually resolve much faster. Since you're retired, this is most likely just routine verification of your retirement income sources. The IRS computers probably flagged something to cross-check your pension distributions, 401k withdrawals, or Social Security benefits against their records. It sounds intimidating but it's actually quite standard. From everything I've observed in this community, most people with your exact situation (570 code with matching dates) see their holds released within 2-3 weeks without needing to take any action. I'd suggest checking your transcript again around March 18th to look for either a 571 code (hold released) or 846 code (refund issued). Also keep an eye on your mail - if a 971 code appears on your transcript, it means they've sent you a notice, though many times these are just informational updates rather than requests for documents. Try to stay patient! Your home repairs will definitely happen - just with a brief detour through the verification process. This community has seen countless situations like yours resolve automatically!
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