The Internal Revenue Service (IRS) has officially rolled out its new free electronic tax-filing system, known as Direct File, to taxpayers in 12 selected states. This development marks a significant step in the IRS’s efforts to simplify the tax filing process for Americans, with the agency planning to extend the service across the nation at a future date.
The introduction of Direct File aligns with the IRS’s broader transformation initiatives aimed at enhancing its operations and improving the taxpayer experience. IRS Commissioner Danny Werfel highlighted the dedication of IRS employees in leveraging new funding to enhance taxpayer services, including efforts to streamline the tax preparation and filing process.
Direct File is designed to cater to taxpayers with straightforward tax situations, such as those with basic W-2 forms and standard deductions, providing them an opportunity to file their federal income taxes with ease this tax season.
However, for state tax returns, individuals residing in states with state tax filing requirements will need to file these separately. The IRS intends to guide taxpayers to appropriate state-specific tools for submitting their state returns, where available.
Distinct from the IRS’s existing Free File program, which is available to taxpayers with an income below $79,000, allowing them to file their taxes at no cost through third-party software providers, Direct File is accessible to all taxpayers, irrespective of their income level. This new initiative by the IRS represents a move towards greater inclusivity and convenience in tax filing, aiming to alleviate some of the complexities associated with the process.
Here’s everything you need to know about Direct File:
What states are eligible for Direct File?
For now, the IRS is limiting its Direct File tool to eligible taxpayers residing in these states:
- Arizona
- California
- Florida
- Massachusetts
- New Hampshire
- New York
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
What are the requirements for Direct File?
If you report any of these items on your tax return, the IRS says you can use their free filing tool:
- SSA-1099 Social Security and RRB -1099 railroad retirement income
- W-2 wage income
- 1099-G Unemployment compensation
- 1099- INT Interest income of $1,500 or less
Taxpayers who also claim credits like the Earned Income Tax Credit, Child Tax Credit, or Credit for Other Dependents are also able to file and claim these benefits using the tool, the IRS said.
Deductions such as the Standard deduction, Student loan interest, and Educator expenses are also able to be claimed via Direct File.
How does Direct File work?
The agency said Direct File will have a step-by-step checklist approach to filing that will allow taxpayers to go through their returns smoothly.
The tool will also have interactive icons on each screen to help answer common questions, but it will also offer live assistance directly from an IRS Direct File customer service representative if needed.
Once the filing is done, Direct File will show taxpayers a summary of their 2023 federal taxes before sending an email confirmation of the submission, and another email when the IRS accepts your return for processing.
The IRS will then ask users if they want to file state tax returns and redirect them to a state-sponsored tool if any.
Direct File does not require any software installation or purchase. It’s also mobile-friendly, so users will be able to file their tax returns on a phone or tablet as well as through a computer.
The tool is available in English and Spanish.
How can I use Direct File?
To use Direct File, eligible taxpayers will need to create an IRS account and verify their identity via the ID.me tool.
To verify your identity, the IRS will ask you to provide a driver’s license, state ID, passport, or passport card as well as to take a photo of yourself using a smartphone or upload an image of your selected document.
Taxpayers may choose to verify their identity via live chat to bypass automated biometric collection.
When can you start filing tax returns?
The IRS began accepting and processing 2023 tax returns on Jan. 29. Filing using the Direct File tool will be available starting at 1 p.m. ET Tuesday.
When is the tax filing deadline this year?
The federal deadline for filing 2023 tax returns is April 15 for most filers. However, deadlines vary for state tax returns.
The IRS expects more than 128.7 million people to file individual tax returns this year.
