After what it called a successful pilot program, the Internal Revenue Service (IRS) is working on an expansion of its program that allows people to file taxes directly to the government for free in all 50 states of the United States, Direct File was applied for the first time last year in 12 states (Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming) and was used by 140,803 filing citizens.
It will become permanent for taxpayers in 2025 and will be expanded for more taxpayers in the coming years, “The clear message is that many taxpayers across the country want the IRS to provide more than one no-cost option for electronic filing,” said IRS Commissioner Danny Werfel. “Giving taxpayers additional options strengthens the tax filing system. And adding Direct File to the filing options menu fits perfectly into our effort to make taxes as easy as possible for Americans, including saving time and money.”
IRS to Save Thousands of Dollars to Taxpayers
The IRS expressed that it will work with all states that wish to partner with Direct File, it is also going to expand to include a larger number of tax situations so that more people can be participants.
However, the new program will not replace IRS Free File, which includes business partners that offer free business tax filing software for people below certain income thresholds.
Although it is new, Direct File proved popular, the tax agency said, IRS surveys showed that 90% of users rated their experience as excellent or superior and most cited the ease of use, reliability and free nature of the program.
How the IRS Direct File Works
Before starting to file a tax return, Direct File asks taxpayers to answer screening questions that will determine if they are eligible.
During the 2024 tax filing season, eligibility was limited to people with simple tax returns. For example, taxpayers with income from an employer declared on a W-2 could be eligible, but not if they had other income, such as from a side job or a business. The IRS plans to expand the capacity of Direct File next year to make more people with different tax situations eligible.
However, there is no income threshold, the current Free File Program, for example, is currently only available to taxpayers who earn US$ 79,000 or less, in addition, that program is provided by an alliance of eight different private companies and historically had a low usage rate. Before making use of Direct File, taxpayers have to create an account and verify their identity using Id.Me , a digital identity network already used by other federal government programs.
The IRS also offers a live chat feature that connects taxpayers with a customer service representative. Direct File does not do state tax returns, but taxpayers who are required to file a state return are directed to their state filing system after finishing their federal return. IRS Commissioner Danny Werfel said Thursday that Direct File will serve as an option for taxpayers and will not be mandatory.
