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Describing a quantum impurity coupled to one or more non-interacting fermionic reservoirs is a paradigmatic problem in quantum many-body physics. While historically the focus has been on the equilibrium properties of the impurity-reservoir system, recent experiments with mesoscopic and cold-atomic systems enabled studies of highly non-equilibrium impurity models, which require novel theoretical techniques. We propose an approach to analyze impurity dynamics based on the matrix-product state (MPS) representation of the Feynman-Vernon influence functional (IF). The efficiency of such a MPS representation rests on the moderate value of the temporal entanglement (TE) entropy of the IF, viewed as a fictitious "wave function" in the time domain. We obtain explicit expressions of this wave function for a family of one-dimensional reservoirs, and analyze the scaling of TE with the evolution time for different reservoir's initial states. While for initial states with short-range correlations we find temporal area-law scaling, Fermi-sea-type initial states yield logarithmic scaling with time, closely related to the real-space entanglement scaling in critical 1d systems. Furthermore, we describe an efficient algorithm for converting the explicit form of the reservoirs' IF to MPS form. Once the IF is encoded by a MPS, arbitrary temporal correlation functions of the interacting impurity can be efficiently computed, irrespective of its internal structure. The approach introduced here can be applied to a number of experimental setups, including highly non-equilibrium transport via quantum dots and real-time formation of impurity-reservoir correlations.