What exactly is “enhanced” in Direct File this year? Quite a few useful things.What exactly is “enhanced” in Direct File this year? Quite a few useful things. What exactly is “enhanced” in Direct File this year? Quite a few useful things.
Direct File is a relatively new IRS program that can help you cut out the middleman during tax season, and according to the agency, it’s been “enhanced” this year as it roles out to taxpayers in more and more states.
The agency announced the return of Direct File in a press release on Jan. 10, when it also announced that the 2025 tax season will officially kick off on Jan. 27, the earliest date when you’ll be able to file your tax returns. The Direct File program debuted last year as an extension of an older program and was hailed as a solid, if incomplete, step toward streamlining taxes for everyday folks. Now, the IRS is touting several upgrades to the program to make it more appealing and user-friendly.
In August, the IRS boasted that the first run of the Direct File program had wrapped up after helping over 140,000 taxpayers across 12 states. Overall, it helped people collect around $95 million in tax refunds, while also helping report around $35 million in tax dues from others.
Read on to find out what’s been added to Direct File for the 2025 tax season. For more tax tips, see how income tax brackets have changed this year and find out if your state offers a child tax credit.
What is Direct File?
Direct File is an online program offered by the IRS that allows you to file your tax return directly to the agency for free. It launched as a pilot program in 2024 across 12 states as a result of the Inflation Reduction Act, which President Joe Biden signed into law in 2022.
The program is an extension of another IRS offering known as Free File, which has been around since the early 2000s. Free File, which still exists, offers free tax filing software for low- to middle-income taxpayers, but it’s a lot less streamlined than Direct File and notably still requires you to calculate your own tax balance due.
How is Direct File different in 2025?
The scope of Direct File has been expanded this year. It will now be available from the start of the tax season on Jan. 27, as opposed to the pilot version, which launched later on in the season. It will also be available in 25 states, up from 12 last year.
Direct File will also now allow you to import certain information straight from your IRS account. This feature will debut on a rolling basis: The agency said some people will see the import option in early February, and all users will have it by the end of February.
You’ll now be able to claim a lot more credits and deductions using Direct File as well. This year, you’ll be able to claim the Child and Dependent Care Credit, the Premium Tax Credit, the Credit for the Elderly and Disabled and retirement savings contribution credits, in addition to the Earned Income Tax Credit and the Credit for Other Dependents, which were available last year. On the deduction side, Direct File will now let you claim deductions for Health Savings Accounts, whereas last year you could only claim them for student loan interest and educator expenses.
Other upgrades the IRS made this year
The IRS also touted a handful of upgrades made to its online account systems this year. For starters, users’ online account pages will have new banners warning them about potential scams. Over 280 notices, some tweaked and redesigned from the 2024 tax season, have also been added to these online accounts.
When using the IRS site on your mobile devices, you can now access 67 forms and save your filing progress to pick up later. Previously, you would’ve had to start some forms over in order to do this. Spouses can also now sign the same form.
Additionally, the IRS says that its AI chatbots, which were in place during the pilot launch, have been upgraded this year. They can now handle more tax topics and are available 24/7 for anyone to use.
“These chatbots use either guided help through choice buttons or an open text box for customized questions,” IRS Commissioner Danny Werfel said during a Jan. 10 press call. “Links in the chatbot will take taxpayers to more helpful information available on IRS.gov. The use of natural language processing and understanding to help interpret the input from our taxpayers will help provide the appropriate responses.”
For more, find out how natural disasters have changed tax deadlines this year.
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