The IRS Direct File Pilot: Removing Corporate Middlemen from the Online Tax Filing Equation
By Maya Vibhakar, Congress Watch Intern
With tax season under way, many Americans are currently facing the stress and confusion that often accompanies the process filing their taxes. That’s why many people rely on using private companies like TurboTax or H&R Block to help them file their returns.
But Americans shouldn’t have to pay to do their civic duty — which is why it is such great news that select taxpayers will now have the opportunity to use Direct File, a free and simplified tax filing tool launched by the IRS this year.
Why Direct File?
The complicated and expensive tax filing process is a headache that is uniquely American. In many other nations, the government does people’s taxes for them, a process called return-free filing, or operates a government portal that residents can use for free. Now, after decades of conversation around implementing a similar system in the U.S, the IRS has finally launched a Direct File pilot. And it’s a big deal!
Direct File is a user-friendly, interview-based tool that walks you through the steps of preparing the return with simple and easy-to-understand questions. The software also offers live chat support during the filing process and is available in both English and Spanish.
Right now the average individual taxpayer is estimated to spend 9 hours and $150 in out-of-pocket costs to file an annual tax return, and that money goes directly into the bulging pockets Big Tax Prep. Direct File’s goal is to provide a public option: software that will not only quickly walk you through filing your federal return, but provide this tool completely free for eligible filers.
Who Is Eligible?
Eligible taxpayers from 12 states will be able to participate this filing season: Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Filers can use Direct File if their tax situation from 2023 was relatively simple, and they want to claim common credits like the EITC and the CTC. Additionally, if one’s income came from W-2 employment, they’re likely eligible.
Immigrants are also eligible as long as they have an Individual Taxpayer Identification Number (ITIN) and have previously filed taxes.
What’s Next?
Filers can visit directfile.irs.gov on their computer, tablet, or phone to use the screener tool, and make sure they’re eligible. If you qualify, you can set up your ID.me log in account and sign up to get notifications when Direct File launches more broadly in the 12 states. Direct File will be rolled out in phases, but all eligible taxpayers are expected to have access to the system by mid-March.
Or, if you live in one of the 12 states and think you might be eligible and want to get reminders about when to start using Direct File, let Public Citizen know and we’ll make sure you get an email when it’s available.
Direct File is a huge step toward making online tax filing simple and accessible for all Americans. And most importantly it eliminates the hassle of paying private companies this tax season and we need to make sure that as many people as possible take full advantage of this historic new opportunity.