(NewsNation) — Tax day is right around the corner, and this year, the Internal Revenue Service is offering a free online tax tool that lets eligible taxpayers from 12 states file federal returns directly with the agency.
The new system, called Direct File, is now open 24/7 and available to those with fairly simple tax returns. The pilot program is part of the government’s effort to offer a free alternative to commercial tax preparation software like TurboTax.
The Treasury Department estimates that one-third of all federal income tax returns filed could be prepared using Direct File and that 19 million taxpayers may be eligible to use the tool this tax season. So far, reviews have been positive.
“Against all odds, the government has created an actually good piece of technology,” The Atlantic wrote this week. Vox called the program a “meaningful step” toward a world where people don’t need commercial tax software.
Here’s how to find out if you’re eligible.
Which states are part of the IRS pilot program?
The pilot program is only available to certain taxpayers in 12 states:
- Arizona
- California
- Florida
- Massachusetts
- Nevada
- New Hampshire
- New York
- South Dakota
- Tennessee
- Texas
- Washington state
- Wyoming
Who is eligible for the free online tax tool?
The free tool mainly applies to taxpayers with straightforward returns. Those who report income from their jobs (W-2), social security income (SSA-1099), unemployment compensation (1099-G) and interest income (1099-INT) may be eligible.
Those with other types of income, such as gig economy earnings or business income, can’t use the program. There are also limitations if your household income is over $125,000.
The pilot only supports the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents.
If you claim other credits like the Child and Dependent Care Credit, Saver’s Credit or the Premium Tax Credit, you can’t use Direct File.
Taxpayers can only take the standard deduction, which means those who itemize deductions aren’t eligible.
There are also rules around health insurance. Taxpayers who bought health insurance directly through a marketplace like HealthCare.gov or withdrew money from a Health Savings Account (HSA) don’t qualify.
Find out if you’re eligible here. You can also get an overview of how the program works here.
Can I file my state tax return?
Direct File doesn’t prepare state returns. If you live in Arizona, California, Massachusetts or New York, you will be directed to a state-sponsored tool to file your state return.
What type of ID is required?
To prevent fraud, you’ll need:
- A Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) for yourself and any spouse or dependents you claim
- If applicable, an Adoption Taxpayer Identification Number (ATIN) for dependents you claim
- A current driver’s license, state identification, passport, or passport card
Are there other free options?
Direct File isn’t the only way to file your taxes for free.
Free File is a partnership between the IRS and tax preparation software companies that allows taxpayers to file their federal tax returns at no cost. Some options also include a free state tax return. The free guided programs are available to taxpayers whose adjusted gross income was $79,000 or less in 2023.
MilTax is a free online platform for members of the military, recent veterans and eligible family members.
