Should You Let the IRS Do Your Taxes?

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You may have heard about the IRS Direct File pilot program launched this tax filing season, which is shaking up the tax preparation landscape. This limited test initiative allows taxpayers to file their federal tax returns directly with the IRS, free of charge, without accountants or commercial software.

The pilot program was initially available to a small number of selected taxpayers, mainly state government workers in 12 states. Recently, the IRS expanded the program to more taxpayers. If the test initiative proves successful, the agency could, in future tax seasons, expand participation nationwide.

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IRS Direct File pilot program

Though currently unavailable to most people, Direct File is unlike the traditional IRS Free File, which focuses on taxpayers with income under $79,000. Direct File targets a wider income range and promises a user-friendly experience. However, the initiative, which has sparked debate in Congress and among tax prep giants like H&R Block and TurboTax, faces some challenges.

Some Republicans in the U.S. House of Representatives argued after a hearing that Direct File is "based on questionable polling practices, and unilaterally makes the IRS the tax preparer, filer, and auditor for the American people."

Despite these objections, the IRS has committed to providing improved services, citing interest among taxpayers for a free, IRS-provided filing tool.

Meanwhile, the Federal Trade Commission (FTC) has recently criticized Intuit, maker of TurboTax, and H&R Block for allegedly using misleading advertising to trick customers into paying for tax prep services they thought were free. Intuit TurboTax is appealing the FTC finding and H&R Block is suing the FTC.

IRS Free File is different

Direct File promises to be comparable to commercial tax preparation software. It is supposed to ease the financial burden associated with tax preparation, with IRS data showing that individuals typically spend around $250 on tax preparation services.

IRS Free File, on the other hand, is targeted at tax-payers with low and moderate incomes. For the 2023 tax year, Free File is allowed if your adjusted gross income (AGI) was $79,000 or less, regardless of filing status. (That is a $6,000 increase over last year's income limit.) The Free File program operates with tax preparation providers with various eligibility rules and products.

While IRS Direct File holds promise for simplifying tax filing, the program faces challenges. Operational hurdles, technical expertise, and coordination with states are among the key issues the IRS must address. Additionally, taxpayers' concerns about trust and the potential impact on IRS audits and tax enforcement linger.

Limitations for IRS Direct File

For now, the IRS is offering Direct File as a limited pilot. So, for this 2024 tax filing season, the Direct File pilot program only processes returns with little to no investment income and that claim the standard deduction. However, taxpayers claiming certain credits, including the earned income tax credit (EITC) or the child tax credit, can potentially use Direct File.

Also, for example, you are not eligible if you had income last year from pension and retirement account distributions.
Taxpayers in the following states might be eligible for Direct File: Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, or Wyoming.
To see if you can use Direct File, go to the IRS Direct File website.

Free tax filing options

As the tax season soon comes to a close and the program nears the end of its first pilot phase, its success and impact on tax preparation remain to be seen. In the meantime, if you are not keen on filing your taxes directly with the IRS, several tax-free filing options and resources exist besides Free File and Direct File.

The IRS offers tax counseling for people age 60 and older. That counseling program, known as TCE or Tax Counseling for the Elderly, operates in partnership with the AARP Foundation's Tax Aide program and utilizes IRS-certified volunteers who specialize in pensions and other retirement-related concerns. To find a provider, you can use an online tool provided by the Treasury Department.

Additionally, if you make $64,000 or less, have a disability, or speak limited English, you may be eligible for Volunteer Income Tax Assistance offered in community centers, libraries, malls, and similar locations. Certain U.S. military Veterans can file online for free with MilTax, which is open until April 18, 2024.

And, if you are comfortable doing your taxes without guided prompts and have AGI over $79,000, you might consider IRS Free File Fillable Forms. The Fillable Forms system has some limitations, such as not being able to attach statements, but the system supports most IRS forms and schedules commonly filed with the 1040 or 1040-SR.

Note: This first appeared in Kiplinger’s Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

This article has been updated to note that H&R Block is suing the FTC.

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Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.