IRS Commissioner Daniel Werfel will testify at a Senate Finance Committee hearing on February 15, 2023.
Kevin Lamarque | Reuters
As tax season begins next week, Americans have several free filing options, and some taxpayers may soon be eligible for a new program from the IRS.
The pilot of the agency’s free filing software, known as DirectFile, will begin as an invitation-only service for government employee groups and will be rolled out to selected taxpayers in 12 states by mid-March.
Laurel Blatchford, chief operating officer of the U.S. Treasury Department’s Inflation Control Act, said in a statement Thursday that the software is “simple, secure, and free.”
Direct filing is done after a feasibility report authorized by the Inflation Control Act. The report found that nearly three-quarters of taxpayers expressed interest in the free filing system offered by the IRS.
According to the Treasury Department, in 2023, individual U.S. taxpayers spent an average of $150 to prepare and file their returns.
The IRS provided a demonstration of Direct File to CNBC and other news outlets Thursday. Here’s what taxpayers can expect next season.
Direct File is “Start Small” with state 12
IRS officials say the IRS Direct File pilot will intentionally begin with a narrow group of taxpayers who file relatively simple returns.
“We’re starting small. As filing season begins, pilots are continually being tested with taxpayers so we can identify and resolve issues,” IRS Commissioner Danny Wuerffel said in a statement Thursday. said.
States affected include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Direct File does not cover state filings, but residents of Arizona, Massachusetts, and New York can immediately proceed with their state filings by importing their Direct File data. California residents use CalFile with pre-filled information.
“We will work closely with the 12 pilot states on this pilot, which will help us gather information about the future direction of the Direct File program,” Werfel said.
Who is eligible for IRS Direct File?
Residents of eligible states who make simple and easy returns may qualify. IRS officials say the pilot will begin with limited types of income, credits and deductions.
Direct File is only available to certain taxpayers, but the bilingual software includes live chat support from an IRS assistant.
The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment income, and interest of $1,500 or less. This means the pilot will not include people with gig economy jobs or business income.
