Recent Tax Updates

IRS Direct File Pilot Program

2023 IRS Direct File Pilot Program

On October 17, 2023, the IRS announced more details on the new IRS Direct File Pilot which will be introduced during the upcoming 2024 filing season.

Here are some the details of this new program:

What is the IRS Direct File Pilot?

The IRS Direct File program will be a mobile-friendly, interview-based on-line tax program that will allow taxpayers to prepare their federal tax return and transmit it electronically directly to the IRS for free. This program is being developed by the IRS using the US government’s technology unit – US Digital Services.

This program will be able to work on a mobile phone as well as on a laptop, tablet or desktop computer.

For the 2024 filing season the Direct File pilot will be a phased-pilot. When it is introduced, it will only be available to a small group of taxpayers. As the filing season progresses, the pilot program will be introduced to more and more eligible taxpayers in the participating 13 states.

IRS direct file. Family filing their tax return on a computer.

Can I File My Taxes Directly With the IRS?

Taxpayers who live in the following States will be eligible, if they meet the types of federal returns that may be filed through using the pilot, at some point during the 2024 filing season to use the Direct File Program: Alaska, Arizona, California, Florida, New Hampshire, Massachusetts, Nevada, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

The Direct File pilot will only cover individual federal income tax returns.  It does not include the ability to prepare individual state income returns. However, once a federal return is completed and filed, Direct File will guide taxpayers that live in Arizona, California, Massachusetts and New York who want to file a state return to a state-supported tool that taxpayers can use to prepare and e-file a stand-alone state tax return, while taxpayers in Washington can apply for the Working Families Tax Credit. 

What Types of Federal Returns are Eligible

For the 2024 filing season the pilot will be limited to individuals reporting only certain types of income, claiming a limited number of credits and can take a few adjustments to or deductions from income as follows:

  • Types of Income
    • Wages from Form W-2
    • Social Security and railroad retirement income
    • Unemployment compensation
    • Interest if it is less than $1,500
  • Credits
    • Earned Income Tax Credit
    • Child Tax Credit
    • Credit for Other Dependents
  • Deductions
    • Taxpayers who claim the Standard Deduction
    • Student loan interest adjustment to income
    • Educator expense adjustment to income

Other Things to Know

  • Taxpayers that participate in the pilot will have access to help from IRS employees that will staff the Direct File support line. These support personnel will provide technical support for the program and provide basic clarification of tax law related to the tax scope of the Direct File program.
  • Direct File is not replacing existing filing options such as tax professionals, Free File, free return preparation sites, commercial software and authorized e-file providers. Taxpayers will continue to have choices, whether they wish to use a tax professional, software product to prepare their own return themselves, Free File, free tax preparation services such as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) as well as filing a paper return or using IRS Direct File.
  • The purpose the IRS Direct File pilot is to test the system the IRS has developed and to learn from this test. This includes testing the technology, customer support, state integration, fraud detection and the overall taxpayer experience. This pilot will allow the IRS to identify issues and make changes prior to any potential large-scale launch in the future.

See the following on the IRS website for more information on the Direct File program:

CrossLink Professional Tax Solutions

CrossLink Professional Tax Software

CrossLink is the industry’s leading professional tax software solution for high-volume tax businesses. Built based on the needs of busy tax offices and mobile tax preparers that specialize in providing their taxpayer clients with fast and accurate tax returns, CrossLink has been a trusted software solution since 1989. CrossLink’s in-depth tax calculations, advanced technological features, and paperless solutions allow you to prepare the most complicated tax returns with confidence and ease while providing your customers an unparalleled experience.

Mark Castro, CPA

Mark Castro, CPA

Mark has been with CrossLink Professional Tax Solutions (CPTS) since 2008, but has been in the tax industry since 1990. As the government/tax industry liaison for CPTS, Mark has been very active in working with the IRS, States, and other tax industry members to help improve communications, promote standardization, and simplification of eFile systems. Mark has also been active with industry associations as a board member of the National Association of Computerized Processors (NACTP) and the Council of Electronic Revenue Communication Advancement (CERCA) for many years. These two associations work with the IRS and States to help solve key eFile and electronic tax system issues and work to improve the operations of the State and IRS eFile systems.

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