This tax season has raised concerns among taxpayers as the Trump administration and tech billionaire Elon Musk have upended the IRS workforce. Still, the tax agency is urging folks to take advantage of free filing tools like Direct File.
So far, the IRS has received close to 800,000 fewer tax returns for the week ending March 28 than the same period last year. That’s slightly better than the filing statistics for the week prior, which saw nearly 1 million fewer returns compared to the same time a year ago.
Overall, more than 86 million tax returns have been filed digitally this tax season. The agency expects over 140 million individual tax returns for the 2024 tax year to be filed by the April 15, 2025, federal deadline, “Tax Day.”.
One tool that has faced scrutiny from the GOP is Direct File, a digital program that allows taxpayers to prepare and file their federal taxes for free with the IRS. The tax prep software was successfully piloted last year under the Biden administration and has since expanded to 25 states this tax season.
It’s estimated that more than 30 million taxpayers will be eligible for the program in 2025, according to the IRS. Furthermore, a study found that 90% of users rated their experience as positive and said the software was easy to use and trustworthy during the pilot.
Despite the favorable feedback, the permanence of the Direct File remains largely uncertain under the Trump administration.
GOP lawmakers have alleged that the program can create confusion for state taxpayers. Elon Musk declared that he had “deleted” 18F, the digital services agency responsible for developing the IRS Direct File system in early February. More planned layoffs at the IRS could impact the program further
“I will commit that, for this tax season, that Direct File will be operative,” Treasury Secretary Scott Bessent said at his confirmation hearing, calming some concerns.
Still, the future stability of Direct File could shift. Here’s what taxpayers had to say about the program.
Taxpayers are interested in Direct File
According to the Tax Policy Center, more taxpayers would like to use Direct File if the free tax-filing program is available in their state. Among those who filed a tax return last year:
- 73% of respondents across all age groups, education, and race said they would be interested in using Direct File if they were eligible for the program.
- 69% of those who paid to file taxes said they were interested in Direct File.
- 85% of people who filed for free last year said they would like to file directly with the IRS via Direct File.
Still, there was some hesitancy among respondents. Two-thirds of tax filers, or 68%, said they didn’t know enough about Direct File to feel comfortable using it. The study found that 88% said that their most recent filing method met their needs.
How many people used Direct File during its pilot?
For fiscal year 2023, over 140,000 tax filers with simple tax situations used Direct File across 12 states during its pilot, which ran from February 1 to April 20, 2024. According to an analysis by the Treasury Inspector General, more than 35,000 tax returns were rejected due to various reasons.
The rejections were mainly due to two reasons:
- Mismatches between prior year adjusted gross income (AGI)
- Inability to reconcile advance payments of the Premium Tax Credit (PTC). This was because the IRS did not include Form 8962 for the PTC in its Direct File pilot.
Why choose Direct File
Last year, the IRS announced that Direct File would be a permanent option for filing federal tax returns as of the 2025 tax season.
“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” former IRS Commissioner Danny Werfel said in a statement.
As reported by Kiplinger, the program was expanded to residents of 25 states this year and could be used by as many as 30 million eligible taxpayers. The move to make Direct File permanent came after multiple lawmakers and organizations urged IRS leaders to renew the program.
Today, Direct File offers live support from IRS staff Monday through Friday from 7 a.m. to 10 p.m. ET. You can also file from your smartphone, tablet, or computer if your state is eligible. Assistance is offered in Spanish and English.
Separately, the IRS Free File also offers taxpayers the option to file their federal income tax returns directly with the agency. There’s one caveat: Your adjusted gross income (AGI) must be 84,000 or less to qualify.
IRS online Free File also offers eight private-sector partners you can choose to file with.
GOP lawmakers target Direct File
A report from the Economic Security Project found that Direct File could save taxpayers $8 billion in filing fees and an additional $3 billion in time costs each tax season. That’s $11 billion in savings.
Additionally, the analysis found that the program could spare more than 400,000 filers a year from enduring the stress of IRS correction proceedings and audits. Finally, Direct File could close long-standing credit gaps for people who unknowingly miss out on tax benefits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
Still, 29 GOP lawmakers urged President Trump to immediately end Direct File.
Mainly, some Republicans claim the program would cause taxpayers to miss their refunds or suffer penalties if they were unaware that they must file their state taxes separately from their federal taxes.
As reported by Kiplinger, tax preparation companies H&R Block and Intuit’s TurboTax have opposed the IRS launching a free tax preparation program.
What’s next for Direct File?
Elon Musk declared on his social media platform X that he had “deleted” 18F, the digital services agency responsible for developing the IRS Direct File system. The CEO of Tesla echoed sentiments from GOP lawmakers who alleged that the program would create confusion for state taxpayers and was a waste of government spending.
Direct File will remain operational for the 2025 tax season, per Treasury Secretary Scott Bessent. However, with layoffs threatening the IRS workforce, there is no telling if the program will be impacted.
Stay tuned to our latest coverage on the matter on our live tax blog, but for now, remember to file your taxes by the April 15 deadline.
