The Internal Revenue Service and the US Department of the Treasury launched the Direct File tax program on March 12, providing a free way for Americans to file their taxes in English and Spanish. Residents of 12 states are eligible for the program, which allows taxpayers to file directly from their smartphone, laptop, or computer. While Direct File cannot handle complex tax situations, it is estimated that 19 million taxpayers could benefit this spring.
The program was developed following President Joe Biden’s 2022 Inflation Reduction Act, aiming to save taxpayers time and money. Taxpayers in 12 states, including California, Arizona, and New York, can use Direct File to receive clear information on taxes owed and expected refunds. As eligibility expands, the program is expected to save the average taxpayer $160 in filing fees and potentially $11 billion annually for Americans overall.
Direct File does not cater to taxpayers whose primary income comes from gig work, business income, or those claiming specific tax credits. Despite proposals in Biden’s latest budget to impose minimum income tax on billionaires and increase corporate tax rates, these initiatives are likely to face opposition from most Republican lawmakers. The IRS has seen improvements with increased funding from the Inflation Reduction Act, such as answering more calls and reducing wait times. The program is set to continue expanding to include more taxpayers and simplify the tax filing process for Americans.