IRS to roll out free tax filing program in 12 states: How it works

(NEXSTAR) – The Internal Revenue Service is launching its new free tax filing system in 2024, and the pilot program will be available to taxpayers in multiple states for the start of tax season, Jan. 29.

Known as Direct File, the IRS says the online tool will come with step-by-step guidance and real-time support, but not everyone will be eligible at first.

As part of a staggered rollout, Direct File will initially be available to government employees in the following states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming.

For the first wave of the pilot program, eligibility will also depend on how straightforward the federal tax return is – itemized deductions, additional gig or business income and certain tax credits won’t qualify.

Depending on the success of Direct File, the IRS plans on opening up access to private sector employees in the 12 participating states by March, a spokesperson told Nexstar.

The free filing service was built in-house at the IRS by a team that includes tax experts, product managers, software engineers, designers and data scientists. It differs from the Free File tool in that there is no income ceiling.

The IRS says Direct File is meant to be an additional option to help simplify the tax filing process, but there isn’t an obligation to use it and it doesn’t replace any existing options.

Direct File could be a welcome experience for some taxpayers fed up with the fees charged by tax filing services.

Last week, the Federal Trade Commission (FTC) ruled that popular tax software company TurboTax deceived customers by calling one of its products for simple returns the “Free Edition.”

The FTC found that most taxpayers didn’t meet the return qualifications, therefore making them ineligible for free filing with TurboTax.