19 Million Taxpayers Eligible for Free IRS Filing Program

19 Million Taxpayers Eligible for Free IRS Filing Program

REUTERS/Jonathan Ernst

 The IRS is testing a new online system that offers free filing directly through the tax agency, and over the weekend, Commissioner Danny Werfel said that millions of people are eligible to use it this year – far more than initially thought when the Direct File program was announced last fall.

“For the first time ever, 19 million taxpayers across 12 states can file their taxes online for free direct with the IRS,” Werfel said in a video message.

The 12 states participating in the test run include five that have state-level income taxes – Arizona, California, Massachusetts, New York and Washington – and seven that do not – Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Eligibility requirements for residents of those states are available on the Direct File website.

The Direct File program was authorized by the 2022 Inflation Reduction Act, which provided the IRS with $80 billion over 10 years to fund modernization and enforcement efforts. Republicans in Congress have slashed that funding by $20 billion and have vowed to make further cuts. Even so, the IRS has pressed ahead with its free alternative to commercial online filing programs, despite pushback from private firms that dominate the multi-billion-dollar business.  

A system that “doesn’t stink”: The Washington Post’s Shira Ovide recently experimented with the Direct File system and gave it a positive review.

“Direct File was not perfect,” she wrote. “Still, I liked using the IRS website — and I definitely prefer it over TurboTax, which annoys me with constant nags for more money and my private data.”

In the end, Ovide couldn’t use the system to file her 2023 taxes, since she earned more than $1,500 in interest income and has a Health Savings Account – disqualifying details, at least during this first test run of the system.

Still, Ovide said the experience reminded her that Americans “deserve effective online government services,” adding that “Direct File is visible proof that government websites don’t have to stink.”