Tax Season Made Easier? What Gig Workers Should Know About IRS Direct File

The IRS is gradually expanding its Direct File program, a free tax filing service aimed at simplifying tax season for millions of Americans. In 2025, over 30 million taxpayers in 24 states will be eligible to use this program—a substantial increase from the 12 states that participated in the pilot program in 2024. This is great news for many taxpayers, but you may be wondering: does this affect gig workers and independent contractors?

For those working as 1099 contractors, filing taxes can be particularly complex. Unlike traditional employees, gig workers must manage self-employment tax, track expenses, and often handle multiple 1099 forms. So, let’s look at what the IRS Direct File program offers, how it’s expanding, and what gig workers can expect in the future as this program grows.

The Direct File program initially launched as a pilot for the 2024 tax season, available in 12 states, including California, Florida, and New York. For the 2025 season, the IRS is adding 12 more states, including New Jersey, Oregon, and Wisconsin, making this free filing option accessible to even more people. The IRS has also expressed a goal to continue expanding Direct File, inviting all 50 states to participate and opening the door for a nationwide rollout by 2026. This growing accessibility provides a valuable alternative to traditional tax filing services, particularly for taxpayers with simpler filings.

For now, Direct File is available to those with relatively straightforward tax situations. In 2024, it covered W-2 wages, Social Security income, unemployment earnings, and interest income under $1,500. However, it excluded self-employed individuals, 1099 contractors, and gig workers. For the 2025 season, the program will support additional types of income, including interest income above $1,500, pension and annuity income, and Alaska Permanent Fund Dividends. Additionally, it will add credits like the child and dependent care credit, premium tax credit for Marketplace insurance, and the credit for elderly or disabled individuals. While these expansions are promising, the program still won’t cover self-employment or 1099 income.

This means that, for now, most gig workers and 1099 contractors will need to continue using other tax filing methods. However, the IRS has stated that it aims to support more complex tax situations in the future, especially those affecting working families. With the IRS gradually broadening the scope of Direct File, there’s hope that it could eventually accommodate gig workers’ tax needs. If this happens, Direct File could provide significant relief by streamlining the tax process and reducing costs, as many gig workers currently pay out of pocket for tax filing services.

The impact could be substantial. During the 2024 pilot, over 140,000 users filed through Direct File, collectively saving around $5.6 million in tax preparation fees. For gig workers and independent contractors, who often face high filing costs due to their more complicated tax situations, this could mean considerable savings. Not only would Direct File reduce the financial burden, but it would also simplify the filing process, which is especially valuable for those navigating self-employment taxes.

This information is particularly relevant to gig workers because it shows a promising shift toward more accessible tax filing options that may one day serve 1099 contractors. Filing taxes as a gig worker involves tracking business expenses, managing multiple income sources, and often dealing with self-employment tax, which can make the process expensive and time-consuming. With Direct File’s gradual expansion, there’s potential for a more affordable, straightforward way to manage tax obligations. Although gig workers aren’t yet included, staying informed about these developments can help them prepare for when Direct File may eventually serve their needs.

Looking ahead, as more states and tax situations are covered, the Direct File program could become a valuable resource for a wider range of taxpayers. For now, 1099 contractors should keep an eye on this program’s progress, as it might soon provide them with a simpler, free option for tax filing. Until then, understanding the limitations and possibilities of Direct File can help gig workers plan their tax filing strategy and anticipate a more accessible system in the coming years.