Tax season starts Monday, and while organizing your documents, the IRS is starting a new program offering another option to make the filing process less hectic.
Direct File is a new online tool that allows people to file their taxes for free, and is rolling out on a limited basis in 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
This service is available on a smartphone, laptop and tablet, and it's available in English and Spanish and features an IRS customer service representative to offer assistance.
The IRS says it's rolling out in phases and will be widely available in mid-March. The agency notes that Direct File pilot will not replace the current options for filing a tax return.
More than 128.7 million tax returns are expected to be filed by the April 15 tax deadline, according to the IRS.
Separately, the tool will include several sources of income and tax credits, including W-2 wage income, Social Security and railroad retirement income, unemployment compensation, the Earned Income Tax Credit, the Child Tax Credit, standard deductions, student loan interest deductions, education expense deductions, and more.
But the pilot is not an option for tax filers if you have other types of income like gig economy or business income, itemized deductions, or, if you claim other credits that include the Child and Dependent Care Credit, Saver’s Credit or the Premium Tax Credit.
Additionally, Direct File does not prepare state tax returns, and the IRS explains that taxpayers required to file a state return will be directed to their state filing system after completing their federal return.
News of the pilot program comes as the IRS is undergoing a massive overhaul, attempting to improve its technology and customer service processes with tens of billions of dollars allocated to the agency through the Inflation Reduction Act, signed into law in August 2022.
The agency was overwhelmed with massive backlogs of paper tax returns in previous years. In June-2022, the IRS faced more than 21 million backlogged paper tax returns.
The Associated Press contributed to this report. This story was reported from Washington, D.C.