The IRS announced recently that its experimental direct file free tax-filing option for simplified tax returns would become a permanent option starting next year. The IRS Direct File Pilot Program, which rolled out on a limited basis earlier this year, saw 140,000 taxpayers claim more than $90 million in refunds and save an estimated $5.6 million in filing costs. Treasury Secretary Janet Yellen says after a successful pilot, they are making Direct File permanent and inviting all 50 states to offer the free filing option to their residents.
Direct file is designed for filers with relatively straightforward tax returns like W2’s or Social Security income and who take the standard deduction. Other types of income, like those from gig work or other business returns, are not eligible. Direct File is not a required government program, and it does not replace existing filing services. Advocates have long called for a program to reduce or even eliminate the cost of filing, especially in the digital age.
