Decoding the IRS’s New Direct File Pilot Program — What it could mean for you

We know from talking to SaverLife members that the tax filing process could be improved, particularly by including more free filing options for simple returns. That’s why we’re encouraged by the recent announcement from the IRS that it just launched an electronic filing pilot program called Direct File this tax season. 

An important caveat to note is that, at this time, not everyone is eligible to take advantage of the Direct File pilot program this year. It’s a pilot program initially launching in 12 states, and it’s expected to expand nationwide next year. 

So, before you bank on this cost-free filing experience, be sure you understand if you’re eligible. Depending on where you live and what kind of income you’re reporting, you may or may not be eligible this tax season. 

We’re here to break down Direct File and help members navigate what it is and who is eligible to take advantage of this new program.

What is the Direct File pilot program?

The IRS’s Direct File pilot offers a new choice to file your 2023 federal tax return online. If you’re eligible, you can file for free, directly with the IRS. This means no pricey software or subscriptions and a break from expensive tax preparers. 

Through the Direct File pilot, you can:

  • File a 2023 federal tax return — for free — in English or Spanish
  • Add your tax information with step-by-step guidance
  • Connect with real-time online support from IRS customer service representatives
  • Complete your tax return from a smartphone, laptop, tablet, or desktop computer

Who is eligible for the Direct File pilot program?

Learn if you’re currently eligible to file your taxes through the IRS’s new Direct File eligiblity tool this year, or read on for our summary below.

Check My Eligibility

You can file your 2023 federal tax return with the Direct File pilot if you:

1) Live in one of the pilot states:

  • Arizona
  • California
  • Florida
  • Massachusetts
  • Nevada
  • New Hampshire
  • New York
  • South Dakota
  • Tennessee
  • Texas
  • Washington state
  • Wyoming

2) Report certain types of income, credits, and deductions:

  • Income
    • W-2 wage income
    • SSA-1099 Social Security income 
    • 1099-G unemployment compensation
    • 1099- INT interest income of $1,500 or less
  • Credits
    • Earned Income Tax Credit
    • Child Tax Credit
    • Credit for Other Dependents
    • Deductions
  • Deductions
    • Standard deduction
    • Student loan interest
    • Educator expenses

Who is NOT eligible for the Direct File pilot program?

The Direct File pilot is not an option for you if you:

  • Have other types of income, such as gig economy or business income
  • Itemize deductions
  • Claim other credits like the Child and Dependent Care Credit, Saver’s Credit, or the Premium Tax Credit
  • Did not live in one of the 12 participating states in 2023

That said, it’s possible Direct File eligibility will change or expand in future years. SaverLife members receive expert tax tips and news right in their inboxes – sign up today to make sure you don’t miss future tax season updates. 

What about state tax filing?

It’s also important to know that the Direct File pilot doesn’t prepare state returns. However, if you live in Arizona, California, Massachusetts, or New York, the Direct File pilot guides you to a state-supported tool you can use to prepare and file your state tax return.

If you live in Washington state, Direct File guides you to a state site where you can apply for the Working Families Tax Credit when you file your federal return with the Direct File pilot.

We’re monitoring Direct File — here’s how you can help

SaverLife is encouraged by this new development and cautiously optimistic that our members will experience its benefits as the program becomes more widely available. 

As with any new initiative or pilot program, we anticipate learning a good deal in this first year about how well it serves SaverLife members. We’ll be asking for your opinions about Direct File in our member survey after tax season is over, but we’d also love your thoughts on it right now, whether you’ve tried using it or not!

Join the Conversation

If you’re a member and choose to use Direct File, we would love to hear about your experiences. Additionally, if you have thoughts about how this program could be improved to support you in the future, let us know in the form above.

We’re always committed to building the power of our members’ voices, and we look forward to using your stories and experiences to better inform the people and entities responsible for new programs and products like Direct File.