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South Dakota tax filers to benefit from free IRS project 

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Mike Moen

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(Greater Dakota News Service) In the coming weeks, South Dakotans will be given a chance to file their taxes online directly with the Internal Revenue Service at no cost. Plans are coming together for the pilot project offered in a dozen states.

IRS officials hope the "Direct File" option will be ready by mid-March, giving taxpayers in selected states about one month to take advantage before the general filing deadline.

Jessie Schmidt, vice president of the South Dakota region for the Better Business Bureau, said it can be done through a smartphone, tablet, laptop or desktop computer. She noted it is largely designed for those planning a straightforward federal return.

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"[If] you're just a direct W2 employee, and that's where the majority of your income comes from, then direct finally may be just absolutely perfect," Schmidt asserted.

The IRS said the option is not available for people who work in the "gig economy" and lean on 1099 documents, nor for those who itemize deductions. The Better Business Bureau said the new service does not appear to have any red flags and uses a secure portal. However, larger tax preparation software companies have criticized the project, saying it will not help people maximize their refunds. 

Meanwhile, those who plan to use certain credits, like the Child Tax Credit, are eligible but Schmidt cautioned some similar credits are not allowed.

"If you use the Child and Dependent Care Credit -- so if you've got two kids in day care and you're using that dependent care credit -- then you can't use this," Schmidt pointed out.

The new service only applies to federal returns, but it's a moot point for South Dakota, which does not have a state income tax. The project is separate from the IRS's long-standing "Free File" option, which guides households with incomes below $79,000 to outside vendors for no-cost online filing.