Tax filing season kicks off Jan. 29. Here's what taxpayers need to know

IRS Commissioner Daniel Werfel testifies before the Senate Finance Committee on April 19, 2023.

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The tax season officially kicks off Jan. 29, which marks the first day the IRS will accept and process 2023 tax returns, the IRS announced Monday.

Most taxpayers must file federal returns and pay balances by April 15 to avoid penalties and interest. But the agency urges taxpayers to begin the filing process sooner.

IRS Free File, which offers free guided tax prep through software partners, will open Jan. 12 and will hold returns until they can be filed with the IRS. Taxpayers may qualify with an adjusted gross income of $79,000 or less for 2023.

Meanwhile, the IRS Direct File pilot, which will allow free online filing through the agency, will roll out in phases with wide availability expected by mid-March for eligible taxpayers in participating states.

“As our transformation efforts take hold, taxpayers will continue to see marked improvement in IRS operations in the upcoming filing season,” IRS Commissioner Danny Werfel said in a statement. “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”

The IRS expects to receive more than 128.7 million individual tax returns by the federal deadline. As of Dec. 29, the average refund for 2023 was $3,167.