IRS: Direct File tax filing service to be available in 'coming days'

New York taxpayers will be among the first to use a free, government-run online filing service, known as Direct File, though it won’t be for everyone and only the most determined will get early access, according to IRS directions released this week.

The Internal Revenue Service, which has been testing Direct File since January with selected groups of taxpayers, said that in "coming days" it will extend the service in “short, unannounced windows of time” for taxpayers in 12 states including New York. The move is meant to be sort of a soft launch, allowing designers to ensure it works with a heavier volume of users.

The agency didn’t say exactly when people could begin using the new service, except to keep checking the top of its website, directfile.irs.gov, for updates and information about eligibility. A message will be posted at the top of the webpage  during periods when New Yorkers can access Direct File. 

Once they start a return, Direct File users will be able to get back in and continue working on it even after the access window closes for new users.

The service, which will be available in English and Spanish, is meant to give Americans a free, user-friendly alternative to paid tax-filing services. The IRS has been developing it over the past several months, generating some criticism from commercial tax-filing services like Intuit’s TurboTax and H&R Block, which consider it a waste of taxpayer money.

Those who are interested must first sign up for the ID.me identification authentication service. They must take the standard deduction and report only limited types of income such as W-2 wages, Social Security income and unemployment compensation. Direct File also will be limited to those who have incomes less than $200,000 (or $125,000 if you're married and filing separately), and taxpayers can claim only the Earned Income Tax Credit and tax credits for children or other dependents.  Check eligibility details on the Direct File website. 

Direct File may be a good option for New Yorkers who have relatively simple tax situations, the IRS said. It could be useful if you have lived in and earned income throughout 2023 in the state, if you plan to use the same filing status on your federal and state returns, and if you claim only the most common state tax credits. 

Direct File is only available for filing federal returns. 

Those who miss the early window will have additional chances to use Direct File in the future. The IRS said that the service will be available to more taxpayers in coming weeks, and it may be expanded to offer more filing options in later years.