You may qualify to file your taxes for free in North Carolina—here’s how

An estimated 1.6 million North Carolinians will be eligible to use the IRS Direct File program to file their taxes this year. 

NC residents have some good news this tax season—the state is participating in the Internal Revenue Service’s (IRS) Direct File Program, which allows qualified residents to file their taxes for free.

The new program was made possible by the Inflation Reduction Act signed in 2022. This year, it will be available in 25 states and has been expanded to include more types of income, deductions, and credits. 

An estimated 1.6 million North Carolina residents will be eligible to use Direct File this year. 

The Direct File Program may be a good option if a person:

• Lived in North Carolina for all of 2024
• Earned all of your income in North Carolina in 2024
• Plan to use the same filing status for both your federal and state tax returns

The program may not be a good option if any of the following situations apply to you:

• You received Qualified Education Loan Payments paid by your employer
• You had student loan debt canceled through the American Rescue Plan
• You want to claim less common credits and deductions, including:
  • 529 contribution deductions
  • Personal Education Student Account Deposits Deduction
  • Credits carried forward from previous years

North Carolinians can use Direct File if they are reporting income using these forms: W-2, 1099-G, SSA-1099, 1099-SA, and 1099-INT, as well as income from an Alaska Permanent Fund Dividend. 

Direct File isn’t available for people who have unreported cash income or are using other forms to report income, like a 1099-NEC for independent work. It also only works with people taking the standard deduction, not itemized deductions. 

Anyone interested in using the program can check their eligibility here.

NC residents who have an Adjusted Gross Income of $84,000 or less may also qualify to use the IRS Free File program, which directs people to “trusted” third-party softwares that offer free federal, and sometimes state, returns. 

To learn more about filing requirements in NC, click here. You’ll be directed to the state’s free filing tool, FileYourStateTaxes, to complete your state tax return once you submit your federal tax return.