IRS to pilot new free tax filing program in 13 states. What to know about Direct File
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Some taxpayers will have the opportunity to try a new free tax filing service next year.
The Internal Revenue Service is set to launch a limited scope pilot of its Direct File program for the 2024 tax filing season, officials said in an Oct. 17 news release. The service will allow individual taxpayers to electronically file their federal tax returns directly with the IRS for no cost.
“In this limited pilot for 2024, we’ll be working closely with the states that have agreed to participate in an important test run of the state integration,” IRS Commissioner Danny Werfel said in the release. “This will help us gather important information about the future direction of the Direct File program.”
Here’s what to know about the new program.
What is Direct File?
Direct File will be available to taxpayers online, and it will be accessible on mobile phones, laptops, tablets and desktop computers, officials said. It is an interview-based service that will be available in English and Spanish.
Officials said the program is not a replacement for existing filing options, but it will serve as an additional option for taxpayers.
The program is funded by provisions in the 2022 Inflation Reduction Act, according to the IRS.
Who is eligible for Direct File?
Residents in 13 states with certain types of income, credits and deductions can participate in the pilot, officials said.
Nine states without a state income tax — Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — are set to participate in the trial run. Arizona, California, Massachusetts and New York will also participate in the pilot, working with the IRS to integrate their state taxes.
Taxpayers residing in those 13 states will qualify for the program only if they are filing individual federal tax returns, officials said. The program will expand to more eligible taxpayers as the filing season progresses.
The IRS said it is still determining what kinds of income can be reported and the credits and adjustments that can be claimed, but for now, the following scope is anticipated to be included in the pilot:
Income reporting: W-2 wage income, Social Security and railroad retirement income, unemployment earnings, interest of $1,500 or less.
Credits: Earned income tax credit, child tax credit, credit for other dependents.
Deductions: Standard deduction, student loan interest, educator expenses.
“We continue to finalize the pilot details and anticipate more changes before we launch for the 2024 tax season,” Werfel said in the release. “Direct File, if pursued further after the pilot, would be another option eligible taxpayers have to help them prepare their tax returns in addition to existing options such as the use of a tax professional, tax software, Free File or another option.”
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