The IRS’s no-cost tax filing software launched fully in 12 pilot states on Tuesday. Officials from the U.S. Department of the Treasury have unveiled state-specific estimates regarding the number of eligible individuals.
“Direct File eligibility is limited to those with simple tax returns this filing season,” remarked Deputy Secretary of the Treasury Wally Adeyemo during a press call on Monday. “But a large percentage of Americans qualify.”
According to Treasury projections, approximately one-third of federal income tax returns could leverage Direct File this season, potentially making 19 million taxpayers eligible.
The Treasury has provided estimates of state-by-state eligibility for Direct File this season, suggesting that approximately 19 million taxpayers may qualify. Here’s the breakdown for each of the 12 pilot states:
– California: 5.2 million
– Arizona: 690,000
– Florida: 2.4 million
– Massachusetts: 850,000
– New Hampshire: 200,000
– Nevada: 480,000
– New York: 2.8 million
– South Dakota: 110,000
– Tennessee: 960,000
– Texas: 3.8 million
– Washington: 1.1 million
– Wyoming: 80,000
The agency aims to receive 100,000 filings this season, which represents approximately 0.5% of eligible filers.
Additionally, this season’s Direct File pilot is available exclusively in these 12 states. However, most taxpayers are eligible for another option: IRS Free File.
IRS Free File is a public-private partnership between the IRS and the Free File Alliance, a nonprofit coalition of tax software companies. For 2023 federal filings, there are eight Free File partners, some of which include state returns.
Taxpayers with an adjusted gross income of $79,000 or less in 2023 can utilize Free File. Furthermore, Free File offers Fillable Forms for all income levels, which serve as the electronic equivalent of paper filings.
Approximately 70% of taxpayers, or roughly 100 million Americans, are eligible for Free File. According to Tim Hugo, executive director of the Free File Alliance, the program is free, user-friendly, and widely accessible.
While only 3% of taxpayers used Free File last season, returns through Free File (including Fillable Forms) have increased by nearly 15% through March 8 compared to the same period last year, as reported by Hugo.
Other free tax filing options available this season include Volunteer Income Tax Assistance, Tax Counseling for the Elderly, and private company software.
