Despite the rapid proliferation of online tax services and numerous tax prep companies setting up shop at every mall across the country, Americans are still heavily split among the many different ways to pay Uncle Sam. From February 6th through April 15th, we surveyed 55,741 US adults to see how they prepare their annual tax returns. What we found was a remarkable level of diversity.
As you can see in the chart above, the largest number of Americans still use a personal accountant to file their taxes. Rapidly gaining ground are those who use online services and file themselves. Purchased tax software and tax preparation companies are tied for third most common. 8% of people still complete their taxes by hand and 4% have them done by a friend or outside family member. “Other” and “None” round out the results.
When we looked at the cross-tabs, we found some not-so-surprising characteristics that were common among people in the various categories. The people who answered “None,” for example, were almost entirely young adults between the ages of 18-24, presumably because they don’t file taxes at all.
People aged 25-34 are the most likely to use an online service, as were people making between $100-150k in annual income and those with a college-level degree. Women are over 30% more likely than men to use online services.
As expected, the wealthiest respondents are most likely to use a personal accountant. A full 45.7% of people making over $150,000 annually file their taxes this way. Concurrently, respondents over age 65, those with an advance degree, and people living in the US Northeast are the most likely to use a professional accountant.
Much like online services, people who use purchase tax software are most likely those who make between $100-150k annually but they are slightly more educated. People age 45-54, men, and people living in the US West are the more likely to use purchased software than people in other categories.
People who use a tax preparation company like H&R block are most likely at the lower end of the income spectrum. 17.5% of people making under $24,000 and 17.2% or people making between $25-49k annually are the most likely to use this kind of service. Tax prep companies are most common among people aged 18-24 and those with only a high school degree or less.
Finally, the people who do their taxes by hand fall at opposite ends of the age spectrum. 9.6% of people over age 65 and 9.3% of people under age 24 still do their taxes the old-fashioned way, presumably because their taxes are the least complicated to complete. Similarly, people who rely on friends or outside family members are generally the youngest and lower-income consumers.
This is the first year we tracked this topic but we will be sure to report back again next year to see if any trends are emerging. It’s a safe bet to assume that online services will grow in popularity.