Direct File is a new tool that allows taxpayers to e-file their federal tax return directly with the IRS. It is an interview-based service that can be accessed on mobile phones, laptops, tablets, and desktop computers. Direct File will be available in English and Spanish starting in 2024 and aims to cater to taxpayers’ needs by meeting them where they are.
During the pilot phase, taxpayers can seek assistance from dedicated IRS Direct File customer support representatives. The pilot will focus on low- to moderate-income working individuals, couples, and families who take the standard deduction. The tool supports various types of income, such as W-2 wages, Social Security/Railroad Retirement benefits, unemployment compensation, and interest income of $1,500 or less. Eligible participants can also claim credits like the Earned Income Tax Credit, Child Tax Credit, and Credit for Other Dependents, as well as deductions for educator expenses and student loan interest. However, other types of income, credits, and deductions are not included in the pilot. While Direct File does not file state tax returns for pilot states with a state income tax, it will direct taxpayers to the appropriate state filing system after submitting their federal return.
The pilot includes partnership with states like Arizona, California, Massachusetts, and New York, as well as states without income tax such as Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
The IRS will introduce Direct File in a phased manner, starting with an invitation-only phase and gradually expanding the user base. The phased rollout ensures that Direct File can effectively meet taxpayer needs, provide customer support, integrate with state systems, and prevent fraud. The IRS expects several hundred thousand taxpayers across the country to participate in the pilot.