IRS Direct File 2024, Pilot Program Eligible States & Key Details!

The IRS is testing a new, free tax filing service called “Direct File,” set to launch in March 2024, aiming to provide taxpayers with a new option for filing returns. In 2024, taxpayers in 13 states might be able to participate in a pilot program for a new IRS tax filing system.

IRS Direct File 2024

In 2024, qualified taxpayers in 13 states will be able to file their federal income tax returns for free using IRS Direct File, an agency-run tax preparation program. The software will be made available to a limited number of taxpayers initially. 

The IRS anticipates that a larger pool of qualified filers will have access to the program by the middle of March. The organisation claims that its Direct File service would use interview-style questions to assist taxpayers in filling out and submitting their tax forms, just like commercial tax software does. 

Users will be able to complete their returns on a computer, tablet, or mobile device, and the service will be accessible in both Spanish and English. Direct File, which is funded by the Inflation Reduction Act of 2022, is the agency’s first effort to offer a free tax filing service on par with currently available commercial software. 

IRS Pilot Program States

This year, the IRS Direct File pilot program allows some qualified taxpayers to file electronically directly through the agency. The IRS stated that this program would be phased out and that individuals in the 13 participating states could anticipate having widespread access to it by mid-March. These states are: 

  1. Alaska
  2. Arizona
  3. California
  4. Florida
  5. Massachusetts
  6. New Hampshire
  7. New York
  8. Nevada
  9. South Dakota
  10. Tennessee 
  11. Texas
  12. Washington 
  13. Wyoming

Taxpayers who live in specific states where the pilot is offered will only be eligible to participate in it. Because Arizona, California, Massachusetts, and New York have decided to collaborate with the IRS on the 2024 Direct File experiment, eligible taxpayers in these states can take part in the pilot this year.

Because there is no state income tax in Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming, eligible taxpayers in these states can also take part in the pilot program. 

In addition, Washington has decided to participate in the integration process as a partner for the state’s Working Families Tax Credit application. Direct File handles federal tax forms and does not prepare state tax returns. 

It directs taxpayers in Arizona, California, Massachusetts, and New York to a state-supported tool for state tax returns, requiring active collaboration between states and the IRS.

IRS Direct File 2024

Which Factors are Considered to File Under IRS Pilot Program 2024?

If you are invited to utilize the IRS Direct File program and reside in one of the 13 test states, be aware of its limits. The IRS claims that the primary tax items, income types, tax credits, and deductions that it can manage are restricted and might alter in the future.

The IRS presently expects the tax scope of the pilot to cover the following, however this is still being finalized and subject to change:

Income reporting

  • W-2 wage income
  • Social Security and railroad retirement income 
  • Unemployment compensation
  • Interest of $1,500 or less

Credits

  • Earned Income Tax Credit
  • Child Tax Credit
  • Credit for Other Dependents

Deductions

  • Standard deduction
  • Student loan interest
  • Educator expenses 

You have to live in one of the 13 states and file your taxes in an easy-to-understand manner in order to be eligible. If you are claiming the earned income tax credit or the child tax credit, for instance, and you have a Form W-2, you may be qualified.

When will IRS Direct File 2024 be Accessible and How Much it Cost?

The IRS said that it is testing a new, free tax filing service called “Direct File,” with a planned launch in March of this year. The IRS also confirmed that tax filing will commence on January 29, 2024.  

US taxpayers will be able to file federal tax returns to the IRS directly for free thanks to this IRS “in-house filing system.” Program access will be divided into phases. 

A broader variety of eligible tax filers should have access to Direct File by mid-March 2024, according to the agency’s projections for January 2024. There will be no cost for the IRS Direct File service. 

Filers who need to complete state returns will be sent to the appropriate state’s filing service after finishing their federal filings. It is not yet known if the state return services would be provided for free.

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