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Consumers and Taxes - US - July 2016

"Most people need to pay taxes. However, while many taxpayers don’t mind paying taxes if they believe the money is used constructively, most would also like to pay the least amount possible. Offering to work with consumers to manage their income tax efficiently would give financial institutions and tax professionals an opening to talk about a variety of financial services, thereby helping to build and strengthen relationships that could carry over into additional financial products and services."
- Robyn Kaiserman, Senior Financial Services Analyst

This report discusses the following key topics:

  • Tax fraud
  • One third don’t take any tax management steps

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Tax fraud
            • 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
            • Figure 2: Tax management activities, May 2016
          • The opportunities
            • People want to learn about how to reduce taxes
              • Figure 3: Interest in learning to reduce taxes, by generation, May 2016
              • Figure 4: USAA email ad, 2016
            • Most pass up tax-advantaged opportunities
              • Figure 5: Tax management activities, by household income, May 2016
            • What it means
            • The Market – What You Need to Know

              • 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

                        • Total tax receipts are up
                          • Figure 6: Gross collections by type of tax, fiscal years 2006-15
                        • E-filing is increasing in popularity
                          • Figure 7: Statistics comparing May 15, 2015 and May 13, 2016
                      • Market Perspective

                        • Breakdown of the tax preparation industry
                          • Figure 8: Breakdown of tax preparers, as of June 1, 2016
                        • Challenges to the tax preparation industry
                          • Figure 9: Who prepares taxes, by generation, May 2016
                      • Market Factors

                        • Lower unemployment
                          • Figure 10: Unemployment rate, January 2010-May 2016
                        • Changes in tax legislation
                          • Figure 11: Interest in professional tax preparer, by demographics, May 2016
                        • Tax preparers are expanding their services
                        • Key Players – What You Need to Know

                          • 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?

                                      • H&R Block
                                        • Intuit
                                          • Figure 12: Mint.com emails, 2016
                                        • Jackson Hewitt
                                          • Faster tax refunds
                                            • VITA and TCE
                                              • Helping the unbanked
                                              • What’s Struggling?

                                                • Fear of scams
                                                • What’s Next?

                                                  • Tax preparers help with ACA enrollment
                                                  • The Consumer – What You Need to Know

                                                    • 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

                                                                  • More get tax refunds than owe taxes
                                                                    • Figure 13: 2015 tax liability, May 2016
                                                                  • Many taxpayers prefer end-of-year refund
                                                                    • Figure 14: Tax payment preferences, by gender, May 2016
                                                                • Tax Preparation

                                                                  • Most do not do own taxes
                                                                    • Figure 15: Who prepares taxes, May 2016
                                                                  • Men are more likely than women to do own taxes
                                                                    • Figure 16: Who prepares taxes, by gender, May 2016
                                                                  • The market for accountants is among high-income earners
                                                                    • Figure 17: Who prepares taxes, by household income, May 2016
                                                                  • Multiculturals are biggest users of third-party tax preparers
                                                                    • Figure 18: Who prepares taxes, by race/Hispanic origin, May 2016
                                                                • Method of Tax Payment

                                                                  • Checks are the most popular method
                                                                    • Figure 19: Method of paying taxes, May 2016
                                                                  • Use of cards is greatest among young taxpayers
                                                                    • Figure 20: Method of paying taxes, by generation, May 2016
                                                                  • Hispanics prefer to spread out tax payments
                                                                    • Figure 21: Method of paying taxes, by Hispanic origin, May 2016
                                                                • Use of Tax Management Strategies

                                                                  • Most take some steps to minimize their taxes
                                                                    • Figure 22: Steps taken to minimize taxes, May 2016
                                                                    • Figure 23: Mint.com email, 2015
                                                                    • Figure 24: TD Ameritrade print ad, 2016
                                                                  • Young people are interested in learning more
                                                                    • Figure 25: Interest in learning how to reduce taxes, by generation, May 2016
                                                                  • Higher earners most interested in paying less
                                                                    • Figure 26: Interest in learning how to reduce taxes, by household income, May 2016
                                                                • Tax Preparation Activities

                                                                  • Attitudes toward tax preparation
                                                                    • Figure 27: Attitudes toward tax preparation, May 2016
                                                                  • Highest earners most confident in deductions
                                                                    • Figure 28: Confidence in deductions, by household income, May 2016
                                                                  • Understanding of tax laws
                                                                    • Figure 29: Understanding of tax laws, by type of tax preparer, May 2016
                                                                • Usage of Tax Refund

                                                                  • Most would use a refund to improve day-to-day finances
                                                                    • Figure 30: How would use a tax refund, May 2016
                                                                  • Men are more likely than women to invest
                                                                    • Figure 31: How would use a tax refund, by gender, May 2016
                                                                  • Hispanics and Blacks pay down bills
                                                                    • Figure 32: How would use a tax refund, by Hispanic origin/race, May 2016
                                                                • Appendix

                                                                  • Fees matter to young parents
                                                                    • Figure 33: Tax-related attitudes – CHAID – Tree output, May 2016
                                                                    • Figure 34: Tax-related attitudes – CHAID – Table output, May 2016
                                                                  • CHAID analysis methodology
                                                                  • Appendix – Data Sources and Abbreviations

                                                                    • Data sources
                                                                      • Sales data
                                                                        • Consumer survey data
                                                                          • Consumer qualitative research
                                                                            • Direct marketing creative
                                                                              • Abbreviations and terms
                                                                                • Abbreviations
                                                                                  • Terms
                                                                                  • Appendix – Consumer

                                                                                      • Figure 35: Tax preparation method, by gender, February 2015-March 2016
                                                                                      • Figure 36: Tax preparation method, by age, February 2015-March 2016
                                                                                      • Figure 37: Tax preparation method, by age, February 2015-March 2016

                                                                                  Companies Covered

                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                  Consumers and Taxes - US - July 2016

                                                                                  £3,277.28 (Excl.Tax)