Taxpayers across the United States are set to benefit significantly as the Internal Revenue Service (IRS) expands its Direct File program for the 2025 tax season, now accessible to eligible Americans across 25 states, including North Carolina and New Jersey. This innovative initiative allows individuals to file their federal income tax returns directly to the IRS at no cost, ushering in what many are calling easier and more efficient tax filing for millions.
Starting on January 27, the IRS opened its Direct File service to taxpayers with straightforward tax situations, marking the first day of the tax season. The 2025 tax filing period has officially begun, prompting many to rush to file their returns to expedite any awaited tax refunds. "The IRS is now open for business. Hallelujah! People who are eager for their tax refunds can file and receive their money quickly," Mike Bosma, Managing Principal at Keystone CPA, remarked on the launch of the new tax season.
Designed to help taxpayers navigate the tax-filing process with ease, the Direct File program walks users through each step, ensuring they answer questions accurately and efficiently. This year, the IRS has rolled out enhanced tools to assist with the filing process, including chatbots to help users check their eligibility for the service. With more than 30 million Americans reportedly eligible for the Direct File program, the IRS aims to reduce reliance on costly tax preparation services.
"Just to be able to go on there and file for themselves without spending much money is groundbreaking," said Lindsey Willis, an accountant from Morehead City. "Frankly, filing directly with the IRS minimizes the chances of errors and avoids the typical pitfalls associated with tax preparation." The Direct File program not only covers the basic earned income tax credit and child tax credit but has also expanded to include several other tax credits, including the premium tax credit and child and dependent care credit.
The program's transition from piloting phase to wider availability has been marked by its effectiveness. Last year, during the 2024 tax season, the IRS successfully introduced Direct File to 12 states, testing its viability and gauging interest. The initiative received positive user feedback, which led the IRS to plan for its permanent implementation. This expansion features states like Arizona, Idaho, and Maryland, alongside previously participating states.
"We hear so much about modernization and losing the human touch; the Direct File program makes people's lives easier, especially during these uncertain economic times," said Amanda Renteria, CEO of Code for America, which facilitated the program. During its initial operation, over 140,000 taxpayers claimed more than $90 million in refunds, saving millions on filing fees.
One of the key elements of Direct File's strategy has been its integration with state tax systems. The civic tech nonprofit Code for America has developed tools like FileYourStateTaxes, which assists those using Direct File to complete their state filings seamlessly. "There was skepticism about integrating state filing with federal returns, but our pilots showed it's possible to make it very user-friendly," Courtney O’Reilly, associate director of tax programs at Code for America, explained. Taxpayers can now access their federal information without needing to re-enter their data when filing their state taxes, making the entire process more streamlined.
Even as the IRS works to modernize, officials remind taxpayers to remain vigilant about potential scams. With the increased online offerings, there's been scrutiny over impostor websites and phishing attempts posing as IRS services. "Our program is new, and unfortunately, so are the methods used by scammers trying to exploit it," Bosma cautioned.
While the majority of people with basic tax returns—particularly those using W-2 forms—can successfully use Direct File, there are still some warnings to keep in mind. Taxpayers receiving 1099 forms for interest or dividends should be particularly cautious, as these documents sometimes require amended submissions.
Direct File making its way to Illinois presents another feather in the cap for this IRS initiative as the program runs alongside traditional methods of tax preparation. The Illinois Department of Revenue urged eligible taxpayers to file through Direct File to minimize both time spent and errors made. “IRS Direct File offers numerous benefits,” said IDOR Director David Harris. “Achieving real-time online support, alongside the guidance provided, means fewer mistakes for taxpayers.”
The excitement among taxpayers and officials alike signals broad acceptance of the IRS Direct File service and its growing role as part of the tax-filing experience. By simplifying the process, taxpayers are empowered to keep more of their hard-earned money. Gov. Phil Murphy's announcement emphasized the program's potential impact on New Jersey residents, asserting, “IRS Direct File will ease the strenuous tax filing process and give New Jerseyans the opportunity to save hundreds of dollars this tax season.”
The deadline for filing federal income tax returns is set for April 15, 2025, which means busy days lie ahead for many Americans as they prepare for tax season using the new Direct File program. The aim to provide meaningful and practical solutions for American taxpayers continues to be at the forefront of IRS plans moving forward, enhancing accuracy and efficiency across the board.