IRS Direct File Pilot: Successful Tax Filing for Over 140,000 at No Cost with Potential Expansion Ahead

This year, over 140,000 individuals successfully filed their taxes using IRS Direct File, a complimentary tax filing pilot program introduced by the US Department of Treasury and Internal Revenue Service (IRS). The initiative commenced in March for certain filers residing in twelve states. It is estimated that this service saved users approximately $5.6 million on federal return fees for preparation costs. During their survey, Direct File received feedback from over 15,000 participants with a satisfaction rating of “excellent” by more than ninety percent (90%) of respondents. The IRS has not yet made any decisions regarding the future expansion or continuation of this program as it needs to analyse relevant data and take inputs into consideration from several stakeholders, informed Commissioner Danny Werfel during a press call. More detailed information about Direct File’s pilot is expected in an upcoming report by the agency within the next few days. The initiative was limited to specific states such as Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming during its trial phase. It only accepted certain types of income including wages reported via Form W-2, Social Security retirement payments, unemployment benefits and interest amounting up to $1,500. Furthermore, Direct File’s eligibility criteria for this season included claiming the standard deduction ($13,850 for single filers or $27,700 for married couples filing jointly in 2024) as well as specific credits such as earned income tax credit (EITC), child tax credit and a few other dependents. Deductions that could be claimed via Direct File during the trial period included student loan interest payments and educator expenses, but it did not accept filers with contractual earnings reported through Form 1099-NEC or gig economy workers who are self-employed. If expanded for next season, this program may add additional states as well as tax situations, according to a senior IRS official. The agency is expected to make its final decision regarding Direct File’s future later in the spring of 2024 based on data analysis and feedback from multiple stakeholders.