After several weeks of testing with about 1,500 returns, the IRS’ free tax filing program, Direct File, is now fully rolled out in 12 test states, according to the U.S. Treasury Department.
Although the pilot focuses on “simple tax situations”, the Treasury estimates the pilot could cover around a third of 19 million taxpayers. The Spanish version will be released later Tuesday at 1pm ET.
“Dozens of countries have offered free tax options to their citizens for many years,” Deputy Treasury Secretary Wally Adeyemo said at a press conference on Monday. “U.S. taxpayers who want to file their taxes directly with the IRS for free should have that option.”
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Adeyemo said Treasury officials expect at least 100,000 taxpayers to participate in the Direct File pilot for 2023 returns when making future decisions about the program. That’s what it means.
The program could save the average filer $160 a year over five years, or a total of $11 billion a year, including tax preparation costs and time, according to a report from the Economic Security Project released Monday. It is said that there is.
IRS Direct File Pilot State
IRS Direct File pilot states include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Alaska was originally included but is no longer part of the pilot.
The soft launch and limited rollout was intentionally designed to collect data for future improvements and decision-making, senior administration officials said.
Although the Direct File pilot does not support state returns, the software directs users in Arizona, California, Massachusetts, and New York to state-supported tax preparation tools.
Direct File Pilot is open to limited filers
IRS officials say you can qualify for Direct File by filing a simple and easy return, with limited types of income, credits, and deductions.
The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment income, and interest of $1,500 or less. This does not include filers whose contract income was reported through Form 1099-NEC, gig economy workers, or self-employed filers.
To qualify, you must claim the standard deduction. This means he will earn $13,850 in 2023 if he is a single filer and $27,700 if he is a married couple filing jointly.
Direct File only accepts a few deductions, such as the Earned Income Tax Credit, the Child Tax Credit, and credits for other dependents. The software also accepts deductions for student loan interest and education expenses.
IRS Direct File Scrutiny
The launch of the Direct File pilot comes amid pushback from the private tax filing industry. The program has also come under scrutiny from some Republican lawmakers who question the agency’s authority to create the program.
When asked about Direct File during a House Ways and Means hearing in February, IRS Commissioner Danny Wuerffel said the IRS Commissioner “has the responsibility and authority to offer taxpayers different approaches to meeting their tax obligations.” said.
Taxpayers have several free filing options this season, including IRS Free File, volunteer income tax assistance, tax counseling for seniors, and software from private companies.
