IRS To Pilot Free, Direct Tax Filing in 2024

The IRS is set to test a free tax filing service called Direct File in 2024 for select taxpayers in up to 13 states, as part of an initiative to offer a free and simple alternative to paid tax preparation services like TurboTax and H&R Block. This move is funded by the 2022 Inflation Reduction Act, which allocated $15 million for the development of a government-provided tax filing service.

Direct File will be a mobile-friendly, interview-based service available in English and Spanish, primarily targeting taxpayers with simpler financial situations. The pilot program will initially roll out in Arizona, California, Massachusetts, and New York, and potentially in other states without state income tax. The IRS will use this pilot to assess the feasibility of offering a voluntary Direct File option to taxpayers, with the specifics evolving based on user feedback. This initiative challenges the paid tax preparation industry’s long-standing resistance to free and transparent tax filing services.