IRS Ends the Direct File Program: What Changes for Taxpayers and How Ace Advisors Can Help

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The Internal Revenue Service (IRS) has announced that the Direct File program—originally designed to allow taxpayers to submit their federal income tax returns directly to the agency at no cost—will be discontinued starting with the 2026 tax season.

The decision came as a surprise to many. Launched in 2024 as a pilot initiative, Direct File allowed taxpayers in select states to file their returns without relying on private software or professional services. However, the IRS has now stated that there are no plans to reinstate the program, emphasizing that the private sector offers more efficient solutions.

What Does This Mean in Practice?

With the end of Direct File, taxpayers will once again depend on:

• Paid tax preparation platforms;

• Professional tax preparers;

• Specialized advisory services for complex situations.

This shift increases both the cost and complexity of the filing process—particularly for individuals with foreign income, assets overseas, or multi-jurisdictional obligations.

Impact on Brazilians With Income or Assets in the United States

For Brazilians residing in the U.S. or holding investments in the country, the termination of Direct File is more than a technological change. Without this free filing option, taxpayers will need to seek alternative solutions that ensure:

• Accurate reporting based on their tax residency;

• Proper treatment of international income;

• Compliance with obligations that may simultaneously exist in Brazil.

This change is even more relevant for those who:

• Own real estate in the U.S.;

• Receive rental income;

• Conduct real estate transactions;

• Maintain cross-border family or investment structures.

Each scenario involves specific rules for withholding, exemptions, and compliance, and incorrect handling can result in unnecessary penalties and financial loss.

Why Expert Guidance Is Essential

At Ace Advisors USA, we closely monitor all updates issued by the IRS and developments within the U.S. tax system.

While programs like Direct File may come and go, the need for accurate, reliable, and personalized tax guidanceremains constant.

Our clients benefit from:

• Tax returns prepared in accordance with current U.S. and international regulations;

• Strategic tax planning to prevent double taxation between Brazil and the U.S.;

• Clear and practical explanations of complex American tax requirements;

• Full transparency regarding deadlines, fees, and potential tax risks.

Even with the conclusion of the Direct File program, our clients remain fully supported.

Ace Advisors ensures that every tax return is prepared efficiently, accurately, and in full compliance with all applicable laws.

In Summary

The IRS may discontinue tools and programs, but taxpayers must still meet their obligations—and for individuals with assets or business interests across Brazil and the U.S., expert guidance becomes indispensable.

At Ace Advisors USA, we are prepared to support each client with tailored solutions, transforming complexity into clarity and ensuring complete compliance with U.S. tax regulations.

If you have income, assets, or investments in the United States, our team is ready to assist.

The right advisory partner makes all the difference.