IRS Update Offers Boost to Millions of Taxpayers

A man opening a wallet.

The Internal Revenue Service (IRS) announced on Wednesday that its program allowing taxpayers to file their taxes online for free, Free File, will be extended by five more years, effectively keeping the free private-sector tax software available through October 2029.

"Free File has been an important partner with the IRS for more than two decades and helped tens of millions of taxpayers. This extension will continue that relationship into the future," said Ken Corbin, chief of IRS Taxpayer Services, in a news release. "This multiyear agreement will also provide certainty for private-sector partners to help with their future Free File planning."

The agency introduced Free File over two decades ago, in 2003, in an attempt to change the way Americans filed their taxes and increase the number of individual tax returns turned over to the IRS.

The program—which is available only on IRS.gov—is a public-private partnership that allows qualified taxpayers to prepare and file federal income tax returns online, using guided tax preparation software at no cost. This can be done through guided tax software or free-file fillable forms, the electronic equivalent of a paper 1040 form.

This year, any taxpayer with an Adjusted Gross Income (AGI) of $79,000 or less in 2023 can file their tax returns online for free through the online guided tax software products made available by eight private-sector Free File partners. Taxpayers with an AGI over $79,000 can use the IRS's Free File Fillable Forms.

Free File has so far helped thousands of people file their income tax returns. This year, an additional 200,000 were filed through the program, reaching 2.9 million returns as of May 11, according to the IRS. That's a 7.3 percent increase from the 2.7 million returns filed through the same period in 2023.

"Free File remains an important part of the IRS portfolio to help taxpayers file their taxes for free," said IRS Commissioner Danny Werfel in the same news release published on Wednesday. "We were pleased to see growth in the program this year, and we look forward to continuing this important collaboration with the tax software industry. Free File was part of a successful filing season at the IRS that saw increased interest in a range of free programs to help taxpayers."

While this year's tax filing season, which opened up on January 29, is now officially over for most taxpayers, those who have requested and obtained an extension can file their 2023 tax returns using Free File through the October 15 deadline.

In April, the agency wrote that it had already received more than 100 million tax returns but was expecting tens of thousands to be filed last-minute as the deadline of April 15 approached. Taxpayers in Maine and Massachusetts had until April 17.

This year, the agency also launched IRS Direct File, which allows eligible taxpayers to file federal returns for free directly to the IRS. Treasury Secretary Janet Yellen praised the initiative earlier this month. She told the House Committee on Ways and Means that "the modernization of the Internal Revenue Service, made possible by the (Inflation Reduction Act) and discretionary appropriations, has enabled us to combat tax evasion by the wealthiest Americans that costs our country over $150 billion a year. And it's made it easier for taxpayers to file their taxes and get the credits they're owed."

The IRS wrote that about 3.3 million people checked their eligibility for the program and 423.450 used it. The agency has not yet announced whether it will extend the pilot program or not.

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