The Direct File program that had been promised and launched by the Internal Revenue Service (IRS) has faced opposition from lobbyists and tax preparation companies such as TurboTax ever since the government-provided free tax filing service was introduced in 2023. Amid the threat of Direct File being removed entirely by the current administration, members of the IRS made a bold decision. They just open sourced Direct File, completely free for anyone to use.
According to 404 Media, the IRS published the majority of Direct File’s code on GitHub, an online platform that allows users and developers to share and store their code to test, develop, and improve their software. While many may see this action as an act of defiance against the current federal government, this is not the case. Per the IRS’s 2024 report on Direct File, it was always intended to become open sourced and available “to build public trust and enable independent assessment of its work.” This would allow more people to try out the program and also create improvements upon it.
This comes at a time when Direct File showed lasting promise. As according to the Tax Policy Center, the majority of Americans were interested in using it to file their taxes. In the same report, the 12 states that did have access to Direct File for the 2024 tax season were pleased with it, with 90% of users rating their experience as positive. Many of the users made it known that they liked how simple and easy it was to file their taxes, especially for free. Direct File was marked for further expansion and availability to even more states prior to the current administration.
Most Americans would welcome a free and easier means to file their taxes. Per a 2024 report by the Tax Foundation, Americans pay $133 billion per year on payments to tax professionals, online tax preparation services, and fees. In addition to the expense, another report showed the average taxpayer spends 13 hours to comply with a Form 1040 tax form.
Time will tell to see if Direct File becomes an even more sought-after method to file taxes, but with that in mind there are ways to still save money before you file. Former financial analyst Tina Orem recommends tweaking your W-4 to have your employer withhold more tax from your paycheck to better ensure a refund the following year. You could also investigate investing more money into a 401(k) or an IRA to both save more money for retirement along with keeping it, tax-free.
If you still want the eyes of a professional to make sure everything is kosher and that you have every advantage before filing, you could still hire a certified public accountant to go through your forms and receipts. While you may spend an average of $319 for a basic non-itemized 1040, it could be cheaper than mistakenly owing more money to the IRS. When shopping around for a CPA, be sure to ask for their preparer tax identification number (PTIN) and verify their credentials through the IRS website.
While things are in flux to determine how the IRS and tax payment will function in the future, it is good to know that there are options available that allow you to file with peace of mind for a low cost or, even better, free of charge.
