The IRS is working on a one-stop-shop for taxpayers to prepare and electronically file their federal income tax return for free through the IRS.
Direct File would work differently than the IRS’ Free File – which connects qualifying filers with a third-party software program to prepare and file their taxes. Free File is still an option and is generally open to taxpayers who make $79,000 or less.
Read on for more about the Direct File pilot program and what Texans can expect this tax season.
LIMITED ACCESS
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According to information provided by the IRS, Direct File is starting with invite-only access to try it, then gradually adding people in phases in a dozen pilot states – including Texas. The IRS said Direct File would be more widely available later in March.
The IRS said it’s starting small to evaluate how it’s working. The Direct File program would support limited tax scenarios. For example, Direct File would not be an option for taxpayers who itemize deductions or report income from gig work. You can use this tool to gauge if Direct File would be an option for your tax situation.
People interested in trying Direct File as it becomes more widely available, can sign up for notifications here. Look for the “sign up to be notified” link in the banner at the top of the page.
HOW IT WOULD WORK
The IRS said Direct File would not require taxpayers to download or purchase any software. Eligible taxpayers would have to create an IRS account and verify their identity through the ID.me tool.
According to the IRS, the Direct File program will offer a step-by-step checklist in English and Spanish to guide tax filers through their federal income tax return. It will also offer live assistance from an IRS Direct File customer service representative to answer questions.
The IRS said that last year, the average nonbusiness taxpayer spent about nine hours and $150 to prepare and file their tax return. In the Inflation Reduction Act of 2022, Congress directed the IRS to work on a free, direct e-filing option for taxpayers.
“Knowing that you don't have to pay extra money, especially for the people who are already going to be paying a chunk of their income to taxes can be a relief,” said Elizabeth Ayoola, personal finance writer for NerdWallet.
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