IRS Direct File: What you need to know about the tax pilot program for free online filing

This phase of the program is limited to taxpayers who meet certain requirements

Internal Revenue Service (IRS) website
The Internal Revenue Service website displayed on a smartphone.SOPA Images (SOPA Images/LightRocket via Gett)
Alonso Martínez

The Internal Revenue Service (IRS) has officially launched the Direct File pilot, an innovative service allowing eligible taxpayers in 12 states to file their tax returns directly with the IRS online for free. According to the IRS, the pilot program has been in a testing phase for several weeks, during which thousands of taxpayers have successfully used it, receiving positive reviews. Now, the IRS is expanding the pilot to all eligible taxpayers in the 12 states, which represent around 19 million taxpayers, who now can access Direct File at any time before the April filing deadline to complete their returns.

The Direct File pilot was launched for the 2024 filing season following a study mandated by the Inflation Reduction Act, which demonstrated broad interest in such a system. The IRS collaborated with various government agencies and underwent testing phases before opening the pilot to all eligible taxpayers in the designated states. Here’s a breakdown:

What is Direct File?

Direct File is a system that helps simplify tax filing for individuals with straightforward tax situations. It guides users through the tax code process, ensuring accurate calculations of refunds or taxes owed. It also allows users to pause and resume filing as needed, and provides live chat support from IRS representatives. Taxpayers can typically receive their refunds in less than 21 days if they choose direct deposit.

Who can use Direct File?

The 12 pilot states include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming. After completing federal returns, taxpayers in states with state income tax will be directed to a state-sponsored tool for their state tax return.

The pilot program is limited to taxpayers who meet certain requirements, such as reporting income from jobs that generate a Form W-2, claiming certain tax credits, and meeting residency criteria.

Direct File can be used even if someone doesn’t owe taxes or have much income as they can get money back for taxes withheld, federal tax credits — such as the Child Tax Credit — or an eligible state tax credit that requires a federal tax return.

Taxpayers who are ineligible for Direct File will be directed to the IRS Free File option, where they can access free tax preparation and filing software provided by trusted partners.

Is it safe?

To protect the user’s information, Direct File uses ID.me for identity verification, which prevents identity theft and keeps data secure. The site states: “ID.me is an account created, maintained, and secured by a technology provider. With an ID.me account, you can access other government partners who also use this sign-in option.”

How does it work?

Direct File has its own website. To enter, users need to create an ID.me account or use theirs if they already have one. Once inside the system, it will guide users and show them how to enter their information. It doesn’t fill it automatically. Direct File works step by step, ensuring all data is entered correctly.

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