IRS launches Direct File, pilot program for free online tax filing

After weeks of testing, an electronic system for filing returns directly to the IRS is now available to taxpayers from 12 selected states.

The new system, called Direct File, is a free online tool. Taxpayers in the selected states who have very simple W-2s and claim a standard deduction may be eligible to use it this tax season to file their federal income taxes. The program will also offer a Spanish version, which will be available starting at 1 p. m. Eastern Time on Tuesday.

“This is a milestone,” said IRS Commissioner Daniel Werfel during a Tuesday press conference to announce the expanded availability of the program. Tax season officially began January 29 and the filing deadline is April 15.

“Direct File marks the first time you can electronically file a tax return directly with the IRS,” Werfel said. “And you can’t beat the price — its free.”

The Treasury Department estimates that onethird of all federal income tax returns filed could be prepared using Direct File and that 19 million taxpayers may be eligible to use the tool this tax season. So far, roughly 20,000 people have participated in the pilot program, according to the IRS, and expect participation to grow to 100,000 filers in the coming weeks.

Certain taxpayers in Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, Arizona, Massachusetts, California and New York can participate. Direct File can only be used to file federal income taxes, taxpayers from states that require filing state taxes will need to do so separately.

“Direct File will offer millions of Americans a free and simple way to file their taxes, with no expensive and unnecessary filing fees and no upselling, putting hundreds of dollars back in the pocket of working families each year, consistent with President Biden’s pledge to lower costs,” said National Economic Advisor Lael Brainard.

Werfel said a component of the program that enhances filers’ usability is the live chat feature that allows taxpayers to interact with the IRS while they complete their taxes.

The Direct File pilot is part of the agency’s effort to build out a new government service that could replace some taxpayers’ use of commercial tax preparation software, such as TurboTax. It’s meant to be simple and provides a step- bystep walkthrough of easyto-answer questions.