New IRS Direct File offers free, easy federal tax return filing in Florida, 11 other states
The Internal Revenue Service is launching a new free tax filing service this year for the 2023 tax season, but only for specific residents in 12 states.
Fortunately, Florida is one of them.
The new Direct File program will be free, easy to use, mobile-friendly and accurate, according to the IRS, available in English and Spanish, and taxpayers will be able to get real-time support from IRS customer service representatives while they're filling it out.
But although the IRS began accepting returns for 2023 on Jan. 29, the Direct File program won't be available to the general public until sometime in March, and will only be an option for a limited scope of taxpayers with simple returns.
Here's what you need to know.
What is the IRS Direct File program?
If you are eligible, the Direct File program will allow you to file your taxes directly with the IRS for free. The service will guide you through preparing your return with a step-by-step checklist and will show you a clear summary at the end, the IRS said.
You can use it from your smartphone, laptop, tablet or desktop computer, no additional software is needed. And you can ask for help.
"Our IRS Direct File customer service representatives can provide technical support and answer basic tax law questions related to the pilot’s tax scope – in both English and Spanish," the IRS said. "The assistors will not have access to your IRS account data. Any questions or issues that fall outside of Direct File will be routed to other IRS support channels."
Direct File won't be able to handle any tax returns that get complicated, at least for now. This is a pilot program and the IRS is keeping it simple to gauge the reaction. Taxpayers who file a Schedule C, for example, buy insurance from HealthCare.gov or itemize their deductions won't be able to participate.
The Direct File pilot program has been open to government employees but is currently open to the public for "short, unannounced windows of time," according to a Wednesday release from the IRS, so that the agency can control how many people get in to better test how it works before opening it to the public. The service is expected to be completely available sometime in March.
Once the program begins accepting returns, live support will be available Monday through Friday from 7 a.m. to 10 p.m. ET.
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Will Direct File customer support give me free tax advice?
No. Customer support will help with technical issues, define tax terms and explain the forms, but they will not be able to advise you on your taxes. You'll need to consult a tax professional for that sort of help.
How can I tell if I'm eligible to use Direct File for free?
The IRS has an eligibility checker you can use, with step-by-step questions to discover if you can use the service. The checker tool does not require personal information and does not commit you to anything.
Who is eligible to file their taxes free with the IRS Direct File program?
You may be eligible to use Direct File if you report these items on your 2023 federal tax return:
Income
Credits
Deductions
However, you won't be able to use it if you have other types of business income or gig jobs, if you itemize your deductions, or if you claim other credits like the Child and Dependent Care Credit, Saver's Credit or the Premium Tax Credit
Do I have to file my taxes? Here's how to know and why you may want to even if you don't.
Which states are participating in the IRS Direct File program?
Initially, the Direct File pilot will be available to eligible people who lived in these 12 states in 2023: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
Direct File works only with federal taxes so most states with state taxes are not included in this first year. Residents of Arizona, California, Massachusetts, New York and Washington will be directed to state-supported sites for help with that.
When does the Direct File program start?
The pilot will be more widely available in mid-March, the IRS said. You can check the top of the site at directfile.irs.gov for the current status to tell if it's accepting returns.
What is the difference between Direct File and IRS Free File? Can't I already file my taxes for free?
The IRS's current free federal tax filing service, Free File, will remain available for anyone who wants to use it, IRS Commissioner Danny Werfel said. However, it requires the use of third-party software and is only an option for households with an adjusted gross income of up to $73,000.
Direct File eligibility has no income limits, does not require you to download any software and was designed to be easier to understand than Free File, the IRS said. Also, not many people were using Free File. An audit conducted by the Treasury Inspector General for Tax Administration found just 2.4% of eligible tax filers in 2019 used Free File services.
Then there were the issues with the third-party companies. Intuit, the company behind TurboTax, was found to be using deceptive practices to hide their Free File page away from search engines and instead steered low-income tax filers toward their own paid services. The company was ordered to pay $141 million to customers in 2022. H&R Block left the Free File program at the end of the 2020 tax season and Intuit followed the next year.
Why is the IRS testing a new program?
There have been movements to create a free filing system directly with the IRS for many years, although it's been an uphill battle. Republicans have fought similar measures in the past and tax filing companies, who stand to lose millions if this program is widely used, have lobbied heavily against it. A spokesperson from H&R Block, pointing out the many other free options available elsewhere, called the Direct File pilot "a solution in search of a problem."
The Inflation Reduction Act of 2022 allocated $15 million to the IRS to study the possibility of a free, direct e-file system. The results of that study, submitted to Congress last May, found that 72% of the more than 4,200 individual taxpayers surveyed would be interested in such a program. Annual costs are expected to range from $64 million for 5 million users to $249 million for 25 million users.
The IRS will be using this pilot program to test if the system is easy to navigate and understand, see how well customer service reps answer questions, and gauge taxpayer interest in a larger IRS-run Direct File program, Werfel said.
Do I have to use Direct File to file my taxes?
No. Direct File does not replace other options such as working with a tax professional, using the IRS Free File, using commercial software or free preparation sites with trained volunteers, or for that matter, mailing in paper returns. The IRS still recommends electronic filing to get them processed faster.
This article originally appeared on The Daytona Beach News-Journal: IRS Direct File pilot program allows some taxpayers to file for free
