The Internal Revenue Service (IRS) released new details about its Direct File pilot program for the 2024 filing season.
The 2024 Direct File pilot, a new service that will provide taxpayers with the choice to electronically file their federal tax return directly with the IRS for free. This limited-scope pilot during the 2024 tax season will help the IRS further assess customer support and technology needs and evaluate solutions for potential operational challenges identified in the report the IRS submitted to Congress earlier this year.
Arizona, California, Massachusetts, and New York have decided to work with the IRS to integrate their state taxes into the Direct File pilot for filing season 2024. 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. Further, Washington will join the integration effort for the state’s application of the Working Families Tax Credit.
“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,” IRS Commissioner Danny Werfel said. “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.”
Eligibility to participate in the pilot will be limited by the state in which the taxpayer resides and will be limited to taxpayers with certain types of income, credits, and deductions. It is focused on taxpayers with relatively simple returns. The IRS said 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.
The 2022 Inflation Reduction Act provided the IRS with funding to improve taxpayer service, enforcement and technology. It also directed the IRS to study the possibility of a free, direct e-file program, which the IRS submitted in a report to Congress in May 2023. Since the delivery of the report, the IRS has been working to develop a pilot for the upcoming filing season.
“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.”
Eligible taxpayers may choose to participate in the pilot next year to file their tax year 2023 federal tax return for free, directly with the IRS. Direct File will be a mobile-friendly, interview-based service that will work as well on a mobile phone as it does on a laptop, tablet, or desktop computer. The service will be available in English and Spanish for the pilot. It will only apply to individual federal tax returns during the pilot, not state returns. The IRS will publicly share the results of the pilot when available.