IRS makes Direct File a permanent option

The Internal Revenue Service is giving taxpayers one more option when it comes to filing taxes.

The government agency recently announced that it's making the Direct File pilot program permanent. When it launched earlier this year, Direct File offered eligible taxpayers in select states the opportunity to file their taxes directly with the IRS, using software built by the agency.

At the time, the free filing service was available to taxpayers in Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Taxpayers in those states were eligible if they had simple returns, excluding gig economy or business income, itemized deductions, or credits like the child and dependent care credit or saver's credit.

The IRS said in its announcement that it was exploring ways to expand Direct File by covering more tax situations and inviting all states to participate in the program. It expects several states to opt in.

Direct File taxpayers largely reported positive experiences, according to an IRS survey of more than 15,000 participants. Ninety percent of respondents said their experience was excellent or above average. They particularly liked that the software was easy to use, trustworthy, and free. Nearly half said they'd paid for tax preparation the previous year.

The agency said that it plans to expand Direct File to support most common tax situations, with a "particular focus on those situations that impact working families." Taxpayers can expect to hear more about new states joining the program, in addition to expanded eligibility, in the next several months.

"The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically," said IRS Commissioner Danny Werfel.