Table of Contents
Executive Summary
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- The issues
- Tax fraud
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- Figure 1: Willing to wait for refund if no chance of fraud, by household income, May 2016
- One third don’t take any tax management steps
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- Figure 2: Tax management activities, May 2016
- The opportunities
- People want to learn about how to reduce taxes
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- Figure 3: Interest in learning to reduce taxes, by generation, May 2016
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- Figure 4: USAA email ad, 2016
- Most pass up tax-advantaged opportunities
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- Figure 5: Tax management activities, by household income, May 2016
- What it means
The Market – What You Need to Know
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- Tax receipts have increased considerably
- E-filing and refund amounts are increasing
- Challenges to the tax preparation industry
- Lower unemployment means more people paying taxes
- Changes in tax legislation
Market Size
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- Total tax receipts are up
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- Figure 6: Gross collections by type of tax, fiscal years 2006-15
- E-filing is increasing in popularity
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- Figure 7: Statistics comparing May 15, 2015 and May 13, 2016
Market Perspective
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- Breakdown of the tax preparation industry
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- Figure 8: Breakdown of tax preparers, as of June 1, 2016
- Challenges to the tax preparation industry
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- Figure 9: Who prepares taxes, by generation, May 2016
Market Factors
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- Lower unemployment
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- Figure 10: Unemployment rate, January 2010-May 2016
- Changes in tax legislation
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- Figure 11: Interest in professional tax preparer, by demographics, May 2016
- Tax preparers are expanding their services
Key Players – What You Need to Know
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- H&R Block
- Intuit
- Jackson Hewitt
- Volunteer organizations help the low income, elderly, and the unbanked
- Fear of scams
- Tax preparers help with ACA enrollment
What’s Working?
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- H&R Block
- Intuit
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- Figure 12: Mint.com emails, 2016
- Jackson Hewitt
- Faster tax refunds
- VITA and TCE
- Helping the unbanked
What’s Struggling?
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- Fear of scams
What’s Next?
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- Tax preparers help with ACA enrollment
The Consumer – What You Need to Know
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- More get tax refunds than owe taxes
- Many taxpayers prefer end-of-year refund
- Most taxpayers don’t do their own taxes
- Hispanics prefer to spread out tax payments
- Most take some steps to minimize their taxes
- Tax preparers need to compete on more than just price
- Most would use a refund to improve day-to-day finances
Tax Liability
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- More get tax refunds than owe taxes
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- Figure 13: 2015 tax liability, May 2016
- Many taxpayers prefer end-of-year refund
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- Figure 14: Tax payment preferences, by gender, May 2016
Tax Preparation
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- Most do not do own taxes
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- Figure 15: Who prepares taxes, May 2016
- Men are more likely than women to do own taxes
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- Figure 16: Who prepares taxes, by gender, May 2016
- The market for accountants is among high-income earners
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- Figure 17: Who prepares taxes, by household income, May 2016
- Multiculturals are biggest users of third-party tax preparers
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- Figure 18: Who prepares taxes, by race/Hispanic origin, May 2016
Method of Tax Payment
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- Checks are the most popular method
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- Figure 19: Method of paying taxes, May 2016
- Use of cards is greatest among young taxpayers
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- Figure 20: Method of paying taxes, by generation, May 2016
- Hispanics prefer to spread out tax payments
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- Figure 21: Method of paying taxes, by Hispanic origin, May 2016
Use of Tax Management Strategies
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- Most take some steps to minimize their taxes
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- Figure 22: Steps taken to minimize taxes, May 2016
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- Figure 23: Mint.com email, 2015
- Figure 24: TD Ameritrade print ad, 2016
- Young people are interested in learning more
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- Figure 25: Interest in learning how to reduce taxes, by generation, May 2016
- Higher earners most interested in paying less
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- Figure 26: Interest in learning how to reduce taxes, by household income, May 2016
Tax Preparation Activities
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- Attitudes toward tax preparation
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- Figure 27: Attitudes toward tax preparation, May 2016
- Highest earners most confident in deductions
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- Figure 28: Confidence in deductions, by household income, May 2016
- Understanding of tax laws
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- Figure 29: Understanding of tax laws, by type of tax preparer, May 2016
Usage of Tax Refund
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- Most would use a refund to improve day-to-day finances
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- Figure 30: How would use a tax refund, May 2016
- Men are more likely than women to invest
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- Figure 31: How would use a tax refund, by gender, May 2016
- Hispanics and Blacks pay down bills
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- Figure 32: How would use a tax refund, by Hispanic origin/race, May 2016
Appendix
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- Fees matter to young parents
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- Figure 33: Tax-related attitudes – CHAID – Tree output, May 2016
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- Figure 34: Tax-related attitudes – CHAID – Table output, May 2016
- CHAID analysis methodology
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – Consumer
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- Figure 35: Tax preparation method, by gender, February 2015-March 2016
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- Figure 36: Tax preparation method, by age, February 2015-March 2016
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- Figure 37: Tax preparation method, by age, February 2015-March 2016
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