The Internal Revenue Service launched a pilot program last year that allows people to file their taxes directly with the federal government for free.
This project is known as Direct File and has since expanded to 25 states.
“The IRS is committed to delivering significantly improved services by providing taxpayers with tools, information, and assistance to make it easier to comply with their tax filing obligations,” former IRS Commissioner Danny Werfel said. “Direct file, used by numerous tax jurisdictions around the world, has long been discussed as an option for improving the customer experience for taxpayers in the U.S.”
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The program allows individual filers with simple W-2s, not those with multiple streams of income, to file their tax returns directly with the IRS. The program was created by the government agency 18F, and it received $15 million in funding from the Inflation Reduction Act. During the 2024 tax season, 140,803 people filed their taxes with Direct File. The program assisted in distributing $90 million in refunds and saving filers an estimated $5.6 million in filing costs. The average person typically spends $140 to file their taxes, according to the Associated Press.
As employers start sending out tax documents and everyone begins to prepare their filings, here is what to know about the free program.
Criticism of Direct File
Republican lawmakers opposed the Inflation Reduction Act’s allocation of money for the Direct File program, and as of January, 29 House members have called on President Donald Trump to end it.
“We write to urge you to take immediate action, including but not limited to a day-one executive order, to end the Internal Revenue Service’s (IRS) unauthorized and wasteful Direct File pilot program,” a letter sent to Trump reads. “The program’s creation and ongoing expansion pose a threat to taxpayers’ freedom from government overreach, and its rollout and structural flaws have already come at a steep price.”
Dan Savickas, the director of policy at the right-leaning Taxpayers Protection Alliance, opposes the expansion, telling the Washington Examiner last year that one of the big problems behind this program is that the federal government is not incentivized to save people money if they file their taxes through Direct File.
“A company like TurboTax wants to provide the best services for Americans, generate the most savings, and find the deductions that work for them,” Savickas said. “The IRS is tasked with generating revenue, so they have no incentive to find the best deductions and the most savings.
“So when the tax collector becomes the tax filer as well, that’s a natural problem,” he added.
Meanwhile, a spokeswoman for Intuit, which runs the TurboTax filing service, said the program is just a “solution in search of a problem.”
“The data is clear,” she said. “Taxpayers continue to want and benefit from having an advocate when filing their taxes to help ensure that they pay only what they owe and receive the maximum refund they are eligible for. Intuit TurboTax is proud to advocate for taxpayers and provides a tax return lifetime guarantee for accuracy and maximum refund.”
Praise for the program
Meanwhile, customer satisfaction with the Direct File program remains high — 90% of respondents rated their experience with the program as either “above average” or “excellent,” and 86% said their experience with Direct File increased their trust in the IRS itself.
The program was created with the partisan support of Democrats, and Sen. Elizabeth Warren (D-MA) spearheading it. Warren applauded the program in April 2024 as being “easy and free” to taxpayers.
“And that means, instead of the $150 on average and nine hours that taxpayers typically spend for the privilege of filing their taxes, they can do it for free with the IRS,” Warren said during a hearing.
Werfel said during the hearing that the program worked.
“Taxpayers told us, in almost unanimity, that it was easy to use, fast, secure, and, of course, free, which was the bottom line that people wanted to emphasize,” Werfel said. “So very, very encouraging results.”
How to use Direct File
The IRS began accepting tax returns on Jan. 27, meaning Direct File is open to the public.
Filers can head to directfile.irs.gov to check their eligibility. Direct File is only available in 25 states: Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maryland, Maine, Massachusetts, Nevada, New Hampshire, New Mexico, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, Wyoming.
There are certain restrictions for use with Direct File. Those whose household earnings are above $125,000, are married but filing separately, have unreported tax money such as tips or alimony, or have income reported on other tax forms are ineligible. Eligible forms include a W-2, 1099-G, SSA-1099, 1099-SA, or 1099- INT.
Direct File can be used for common savings accounts, but filers cannot use it if they added or used money from a Medical Savings Account. If filers have contributions to an IRA, except for direct rollovers, or distributions from an IRA, they cannot use Direct File. Itemized deductions cannot be made with Direct File, only standardized deductions are allowed.
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Direct File only accepts common tax credits, including the child tax credit, credit for other dependents, child and dependent care credit, earned income tax credit, premium tax credit, saver’s credit, and credit for the elderly or the disabled.
If taxpayers decide it is a good fit for them, they can create accounts. They must verify their identities by uploading a photo or video of themselves. Then, taxpayers can complete and review their returns and input their payments or refund information. If taxpayers need to file state returns, Direct File will direct them to their states’ online filing systems.