IRS to test free tax software in 13 eligible states for 2024

The IRS is gearing up to introduce new, user-friendly tax preparation software for the 2024 tax season, aiming to simplify the tax filing process.

The free program, called “Direct File,” will be available in 13 states, and taxpayers selected to use it will receive invitations around mid-February to try it out.

“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 a press release. “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.”

This process will eventually expand to more users and could be an alternative to private tax services like H&R Block or TurboTax.

According to the IRS, the pilot program is for taxpayers in specific states with simple income and tax situations. It will cover common income sources like wages and key tax credits like the Earned Income Tax Credit and the Child Tax Credit.

IRS officials are collaborating with Arizona, California, Massachusetts, and New York to integrate state taxes into the pilot for the 2024 filing season. Additionally, taxpayers in nine states without income tax — Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming — may also have the opportunity to participate in the pilot.

“The Direct File pilot is undergoing continuous testing with taxpayers to identify and resolve issues to ensure it’s user-friendly and easy to understand. We continue to finalize the pilot details and anticipate more changes before we launch for the 2024 tax season,” said  Werfel.

Although not all taxpayers in these states will meet the qualifications, the agency predicts that hundreds of thousands of taxpayers will take part in the program’s limited rollout during the 2024 filing season.