How will the new IRS free online tax filing service work for 2024?

Tax filing time is still a while away, thank goodness, but that doesn’t mean preparations are yet to begin. Indeed, the IRS has announced plans for a huge trial for a new federal income tax pilot that aims to finally make taxes free, easy, and accessible.

The “Direct File” pilot test will provide taxpayers with the choice to electronically file their federal tax return directly with the IRS for free. Taxpayers can choose to use it for tax year 2023 and it will be a mobile-friendly, interview-based service that works on all devices. It will be an option for hundreds of thousands of taxpayers in 13 states in 2024.

“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS,” said IRS Commissioner Danny Werfel.

“In this limited pilot for 2024, we’ll be working closely with the states that have agreed to participate in an important test run of the state integration. This will help us gather important information about the future direction of the Direct File program.”

The problem of paid tax returns in the US

Currently, the IRS has a Free File Tool Kit and more than 97 million people are eligible for the help. However, this is restricted to people earning $54,000 or less. Despite this, only 3% of filers use this service. Though everyone needing to file a tax return, they are neither easy to do nor cheap to have someone else do for you. Taxpayers must either do it by hand or pay someone else to do it.

According to Nerdwallet.com, people who paid to file federal tax returns in 2021 typically spent $150 each. Were this process to be made free by the IRS in future (currently people pay private companies) then that is a fair amount of money freed up for people.