13 states join the IRS direct-file test after tax prep firms dropped the ball

A picture of the Internal Revenue Service headquarters in Washington, DC.

a:hover]:text-gray-63 [&>a:hover]:shadow-underline-black dark:[&>a:hover]:text-gray-bd dark:[&>a:hover]:shadow-underline-gray [&>a]:shadow-underline-gray-63 dark:[&>a]:text-gray-bd dark:[&>a]:shadow-underline-gray”>Photo by Chip Somodevilla / Getty Images

An Internal Revenue Service pilot might just eventually bring US citizens a free direct-file alternative to commercial options like TurboTax and H&R Block. Yesterday, the agency announced that 13 states are joining its pilot program for the 2024 filing season, four of which will also be able to integrate their state taxes into the pilot.

Since 2001, a partnership between companies like TurboTax maker Intuit and the IRS called the Free File Alliance has given consumers a free alternative to paying for tax preparation. However, it turned out that when you try to get companies to offer an alternative to giving you money, they will do their best to hide that option. When the IRS updated the agreement to forbid companies from doing that — and give itself permission to create its own free file option — both H&R Block and Intuit left.

According to the IRS, these are the states joining the pilot:

  • States with state income tax: Arizona, California, Massachusetts, and New York
  • States without state income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming

The pilot doesn’t guarantee a nationwide rollout of the program. Danny Werfel, who heads the IRS, says this will test the government’s capacity to do this, adding that the Internal Revenue Service will work closely with participating states to gather the information it needs to see if the program works.

The IRS says its scope could change, but the pilot is starting small. Only some people can participate, depending on their income, tax credits, and deductions. For instance, if you’re filing a W-2 and have basic deductions like student loan interest or the standard deduction — the default one that everyone gets unless they need to deduct more — you can directly file. If you’re an independent contractor, though, it sounds like you may be stuck with your usual options.


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