Table of Contents
Executive Summary
-
- Top takeaways
- Market overview
- Impact of COVID-19 on tax preparation and filing
-
- Figure 1: Short-, medium- and long-term impact of COVID-19 on tax preparation and filing, April 2021
- Opportunities and challenges
- Tax preparers can embrace the video chat like other industries.
- Even as economy recovers, consumers may still choose to DIY.
- Tax preparers – professional or DIY – must prove their worth.
Market Factors
-
- Tax returns continue steady climb
-
- Figure 2: Gross tax collections, at current prices, fiscal years 2010-19
- Individual returns represent bulk of filings
-
- Figure 3: Gross tax collections, by segment, at current prices, fiscal years 2010-19
- Steep fall off in returns and receipts in 2020
-
- Figure 4: Filing statistics, May 17, 2019 and May 15, 2020
- High unemployment impacts taxable income
-
- Figure 5: Consumer confidence and unemployment, 2000-April 2021
Companies and Brands
-
- TurboTax Live Full Service aims for videoconferencing normalcy
-
- Figure 6: TurboTax Ad, 2020
- H&R Block focuses on free filing
-
- Figure 7: H&R Block emails, 2020
- Online bank Varo demonstrates effective link between taxes and banking
-
- Figure 8: Varo Instagram post, 2020
The Consumer – Key Takeaways
-
- DIY filers increase in number for 2019
- Millennials comfortable doing own taxes, but open to change
- Tax software dominates DIY market
- Accountants are primary method for those using professional help
- Third-party preparers common among Hispanics
- Check is most common form of payment
- Most engage in some tax planning strategies
- Consumers sticking with same tax filing method
Tax Filing Results and Behaviors
-
- Nearly half of taxpayers at least get a federal refund
-
- Figure 9: Tax filing result, November 2020
- More income, more taxes due
-
- Figure 10: Tax filing result, by household income, November 2020
- Many single adults don’t file
-
- Figure 11: Non-filers, by marriage status and gender, November 2020
- There is a need for non-English speaking tax professionals
-
- Figure 12: Tax filers, by language spoken at home, November 2020
Tax Preparation
-
- Nearly half of US adults are doing their own taxes
-
- Figure 13: Tax preparation, May 2016 and November 2020
- Men are more likely to do their own taxes
-
- Figure 14: Tax preparation, by gender, November 2020
- Millennials are self-sufficient for tax preparation
-
- Figure 15: Tax preparation, by generation, November 2020
- The self-employed rely on tax professionals
-
- Figure 16: Professional tax preparation, by employment status, November 2020
Tax Preparation Method
-
- Tax software dominates DIY market
-
- Figure 17: Tax preparation method, November 2020
- Volunteer organizations effective with lower-income audience
-
- Figure 18: Tax preparation method, by household income, November 2020
Professional Preparation Choice
-
- Accountants are primary method for those using professional help
-
- Figure 19: Professional tax preparation choice, November 2020
- Women are more likely to use an accountant
-
- Figure 20: Professional tax preparation choice, by gender, November 2020
- Baby Boomers stick with accountants
-
- Figure 21: Professional tax preparation choice, by generation, November 2020
- Third-party preparers common among Hispanics
-
- Figure 22: Professional tax preparation choice, by Hispanic origin, November 2020
- High earners provide best market for accountants
-
- Figure 23: Professional tax preparation choice, by household income, November 2020
Tax Payment Method
-
- Check is most common form of payment
-
- Figure 24: Tax payment method, November 2020
- Young consumers far more likely to use cards
-
- Figure 25: Federal tax payment method, by generation, November 2020
-
- Figure 26: State tax payment method, by generation, November 2020
- Those working with professional pay by check
-
- Figure 27: Federal tax payment method, by tax filing method, November 2020
- Figure 28: State tax payment method, by tax filing method, November 2020
Tax Reduction Strategies
-
- Most engage in some tax planning strategies
-
- Figure 29: Tax reduction strategies, November 2020
- Men more actively engage in tax planning
-
- Figure 30: Tax reduction strategies, by gender, November 2020
Attitudes about Taxes
-
- Despite pandemic, consumers sticking with same tax filing method
-
- Figure 31: Attitudes about taxes, November 2020
- COVID-19 has greatest impact on Hispanic tax filing
-
- Figure 32: Attitudes about taxes, by Hispanic origin, November 2020
- Younger generations still need tax help
-
- Figure 33: Attitudes about taxes, by generation, November 2020
- DIYers more confident, lack of faith in professionals
-
- Figure 34: Attitudes about taxes, by tax filing method, November 2020
Use of Tax Refund
-
- Most consumers would save tax refund
-
- Figure 35: Use of tax refund, November 2020
- Millennials looking to pay down debt
-
- Figure 36: Use of tax refund, by generation, November 2020
Appendix – Data Sources and Abbreviations
-
- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
Back to top