More taxpayers to file tax returns for free as IRS makes Direct File permanent

investmentnews.com:

A larger number of taxpayers should be eligible to access a free tax filing solution from the Internal Revenue Service following a successful pilot.

The agency’s Direct File system was established in response to taxpayer feedback that they wanted a way to file their taxes for free directly with tax officials. More than 140,000 people in 12 states were able to do this during the 2024 filing season trial run.

With the announcement of the system being made permanent, the IRS says that it hopes that all states partner with it next year to offer more people an alternative to commercial tax software.

The pilot program provided the IRS with valuable data, while additional discussions with stakeholders helped inform the decision to roll out the system, despite the view from some that existing free commercial offerings are adequate.

However, IRS commissioner Danny Werfel was buoyed by high satisfaction rates with those who filed their taxes with Direct File during the pilot.

“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” said Werfel. “So, starting with the 2025 filing season, the IRS will make Direct File a permanent option for filing federal tax returns. Giving taxpayers additional options strengthens the tax filing system. And adding Direct File to the menu of filing options fits squarely into our effort to make taxes as easy as possible for Americans, including saving time and money.”

Improvements to the system are likely to include an expansion of the tax situations that it supports, starting with a focus on working families.

“We will focus, first and foremost, on continuing to get it right,” stated Werfel. “Accuracy and