What to know about Direct File, the IRS’ new free tax-filing program

After weeks of testing, the Internal Revenue Service's free electronic tax-filing system finally launched Tuesday for taxpayers in 12 states.

The new system, called Direct File, in-house online filing tool that the agency is test-running with a dozen states before expanding it nationwide at a later date, according to the IRS.

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“As our transformation efforts take hold, taxpayers will continue to see marked improvement in IRS operations in the upcoming filing season,” IRS Commissioner Danny Werfel said. “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”

Taxpayers in the selected states who have simple W-2s and claim a standard deduction may be eligible to use it this tax season to file their federal income taxes. For state returns, however, taxpayers from states that require filing state taxes will need to do so separately. The IRS will redirect taxpayers to their state's supported tool (if any) to submit those returns.

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The new filing tool is different from the IRS existing Free File program, which allows taxpayers whose income is less than $79,000 to file their taxes for free through participating brand name software. Direct File is open to everyone regardless of income.

Here's everything you need to know about Direct File:

What states are eligible for Direct File?

For now, the IRS is limiting its Direct File tool to eligible taxpayers residing in these states:

Arizona
California
Florida
Massachusetts
New Hampshire
New York
Nevada
South Dakota
Tennessee
Texas
Washington
Wyoming

What are the requirements for Direct File?

If you report any of these items on your tax return, the IRS says you are able to use their free filing tool:

Taxpayers who also claim credits like the Earned Income Tax Credit, Child Tax Credit or Credit for Other Dependents are also able to file and claim these benefits using the tool, the IRS said.

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Deductions such as the Standard deduction, Student loan interest and Educator expenses are also able to be claimed via Direct File.

You can also check your eligibility here.

How does Direct File work?

The agency said Direct File will have a step-by-step checklist approach to filing that will allow taxpayers to go through their returns smoothly.

The tool will also have interactive icons on each screen to help answer common questions, but it will also offer live assistance directly from an IRS Direct File customer service representative if needed.

Once the filing is done, Direct File will show taxpayers a summary of their 2023 federal taxes before sending an email confirmation of the submission, and another email when the IRS accepts your return for processing.

The IRS will then ask users if they want to file state tax returns and redirect them to a state-sponsored tool if any.

Direct File does not require any software installation or purchase. It's also mobile-friendly, so users will be able to file their tax returns on a phone or tablet as well as through a computer.

The tool is available in English and Spanish.

Your chances of getting audited are slim, but here are some signs you can look out for.

How can I use Direct File?

To use Direct File, eligible taxpayers will need to create an IRS account and verify their identity via the ID.me tool.

To verify your identity, the IRS will ask you to provide a driver's license, state ID, passport, or passport card as well as to take a photo of yourself using a smartphone or upload an image of your selected document.

Taxpayers may choose to verify their identity via live chat to bypass automated biometric collection.

When can you start filing tax returns?

The IRS began accepting and processing 2023 tax returns on Jan. 29. Filing using the Direct File tool will be available starting at 1 p.m. ET Tuesday.