The Internal Revenue Service (IRS) launched a free tax filing program, known as Direct File, in 12 pilot states on Tuesday, with officials from the U.S. Department of the Treasury releasing state-by-state estimates of eligibility. Deputy Secretary of the Treasury Wally Adeyemo emphasized during a press call on Monday that Direct File eligibility is restricted to individuals with simple tax returns for the current filing season. However, Adeyemo noted that a significant portion of Americans meet the criteria for the program.
The Internal Revenue Service (IRS) launched a free tax filing program, known as Direct File, in 12 pilot states on Tuesday, with officials from the U.S. Department of the Treasury releasing state-by-state estimates of eligibility. (Photo : by BRENDAN SMIALOWSKI/AFP via Getty Images)
According to Treasury estimates, approximately one-third of federal income tax returns may qualify for Direct File this season, potentially encompassing around 19 million taxpayers. This initiative aims to streamline the tax filing process for eligible individuals, providing them with a free and accessible option to fulfill their tax obligations.
Nevertheless, this tax season, the Direct File pilot is only applicable to certain tax scenarios, such as Form W-2 employees who claim the standard deduction. Start the process by making sure you qualify.
Estimated Eligibility for Direct File Tax Filings This Season
The Treasury estimates that approximately 19 million taxpayers may qualify to use Direct File for their tax filings this season, with varying eligibility figures across the 12 pilot states. In California, an estimated 5.2 million taxpayers could be eligible, while Arizona may see around 690,000 eligible filers. Florida and New York follow closely, with 2.4 million and 2.8 million estimated eligible taxpayers, respectively. Massachusetts, New Hampshire, Nevada, Tennessee, Texas, and Washington also have significant estimated eligibility numbers ranging from 200,000 to 3.8 million.
South Dakota and Wyoming have comparatively lower estimated eligibility figures, with 110,000 and 80,000 eligible taxpayers, respectively. The Treasury hopes to receive approximately 100,000 filings through Direct File this season, which amounts to roughly 0.5% of the eligible filers. This initiative aims to provide eligible taxpayers with a streamlined and accessible option for fulfilling their tax obligations, potentially alleviating the burden of tax preparation and filing.
Alternative Options: IRS Free File and Other Free Filing Services
Only 12 states are offering the Direct File pilot this season, but most taxpayers are also eligible for the IRS Free File alternative.
The IRS and the nonprofit alliance of tax software providers, Free File Alliance, are partners in this public-private initiative. For federal files in 2023, there are eight Free File partners; some of them incorporate state returns.
If your adjusted gross income for 2023 was $79,000 or less, you are eligible to use Free File. Additionally, Fillable Forms-an electronic substitute for paper filings-are available from Free File for all income brackets.
Approximately 100 million Americans, or 70% of taxpayers, qualify for Free File. The Free File Alliance's executive director, Tim Hugo, stated, "It's available, free, and easy to use."
Hugo reports that Free File returns (including Fillable Forms) are up over 15% through March 8 compared to the same week last year, despite the fact that only 3% of taxpayers used the program the previous season.
This tax season, private firm software, tax counseling for the elderly, and volunteer income tax assistance are additional free possibilities for filing taxes.
