The IRS has recently announced the final testing phase for its Direct File program, a free tax filing service aimed at making the process easier for eligible users. With plans to fully open in 12 pilot states on March 12, the program is set to provide a seamless experience for individuals looking to file their federal returns.
The Direct File program will initially be available to users in 12 pilot states, including Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Alaska was initially part of the pilot but has since been excluded. Eligible users can check their eligibility and learn more about the program at directfile.irs.gov.
Starting on March 4, the final testing phase of Direct File will expand to include new users who are eligible to begin filing their federal returns. The software will be available 24 hours a day, 7 days a week, with limited space during final testing. If the day’s allotment of users is exceeded, Direct File may close briefly. However, users who have already started a return will be able to continue uninterrupted.
While Direct File offers a convenient way to file federal tax returns, it does have limitations. The program is designed for simple, straightforward returns with limited types of income, credits, and deductions. For example, Direct File only accepts Form W-2 wages, Social Security retirement income, unemployment earnings, and interest of $1,500 or less. Those with contract income reported via Form 1099-NEC, gig economy workers, or self-employed filers are not eligible for the program.
Users of the Direct File program must claim the standard deduction and can only benefit from a select few credits, including the earned income tax credit, child tax credit, and credit for other dependents. The software also allows deductions for student loan interest and educator expenses.
The Direct File program by the IRS offers a streamlined process for eligible users to file their federal tax returns. With the final testing phase underway and plans to fully open on March 12 in the pilot states, the program aims to provide a hassle-free experience for individuals with simple tax situations.
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