During this tax season, over 140,000 taxpayers were able to successfully file their returns using the IRS Direct File program. This program, which is free of charge, was available to certain taxpayers in 12 states starting in early March. According to the U.S. Department of the Treasury and the IRS, filers using Direct File saved an estimated $5.6 million in tax preparation fees for their federal returns.
A survey of more than 15,000 users of the Direct File program revealed that around 90% of them rated their experience as “excellent.” This high level of satisfaction is a positive indication of the program’s effectiveness and user-friendliness. However, despite the positive feedback, IRS Commissioner Danny Werfel stated that a decision about the future of Direct File has not yet been made. The agency plans to analyze the data and gather feedback from various stakeholders before making a final decision.
The Direct File pilot program included specific states, such as Arizona, California, Florida, and others. It only accepted certain types of income, such as Form W-2 wages, Social Security retirement income, unemployment earnings, and interest of $1,500 or less. This meant that filers with contract income reported via Form 1099-NEC, gig economy workers, and self-employed individuals were not eligible to use Direct File. Additionally, filers had to claim the standard deduction and were limited to certain credits and deductions.
Looking ahead, there is the potential for Direct File to be expanded in the future. A senior IRS official mentioned that if the program were to be extended to the next tax season, it could include additional states and cover more tax situations. The agency is expected to make a decision about the future of Direct File later this spring. By taking into account user feedback and program effectiveness, the IRS will determine whether to continue offering this beneficial service to taxpayers.
The IRS Direct File pilot program has proven to be a convenient and cost-effective way for taxpayers to file their returns. By offering a free option for certain filers and simplifying the tax filing process, Direct File has helped many individuals save money on tax preparation fees. With high user satisfaction rates and the potential for future expansion, this program has the opportunity to benefit even more taxpayers in the coming years.