The Internal Revenue Service (IRS) is moving forward with piloting its Direct File tool in 13 states that will allow people to directly file their taxes next year by only using the online tool if they meet certain criteria.
Moving forward with the pilot phase for the Direct File tool is part of the IRS’ ongoing efforts to modernize its technological capabilities and provide better service to citizens.
“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS,” said IRS Commissioner Danny Werfel. “In this limited pilot for 2024, we’ll be working closely with the states that have agreed to participate in an important test run of the state integration. This will help us gather important information about the future direction of the Direct File program.”
Taxpayer eligibility to participate in the pilot will be limited by the state in which the taxpayer resides, and limited to taxpayers with certain types of income, credits and deductions – in general taxpayers with relatively simple returns. The IRS today announced it anticipates specific income types, such as wages on a Form W-2, and important tax credits, like the Earned Income Tax Credit and the Child Tax Credit, will be covered by the Direct File pilot.
Taxpayers in Arizona, California, Massachusetts and New York – who levy state taxes – will be able to participate since those states entered into memorandums of understanding in September for the purposes of collaboration with the Direct File pilot.
Taxpayers in nine other states without an income tax – Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – may also be eligible to participate in the pilot. All states were invited to join the pilot, the IRS said.
“We have more work in front of us on this project,” Werfel said. “The Direct File pilot is undergoing continuous testing with taxpayers to identify and resolve issues to ensure its user friendly and easy to understand. We continue to finalize the pilot details and anticipate more changes before we launch for the 2024 tax season.”
“Direct File, if pursued further after the pilot, would be another option eligible taxpayers have to help them prepare their tax returns in addition to existing options such as the use of a tax professional, tax software, Free File or another option,” Werfel said. “It’s consistent with the IRS mission to make sure taxpayers have available options that work the best for their personal situation.”
