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Consumers and Taxes - US - July 2016

Published By :

Mintel

Published Date : Jul 2016

Category :

Banking

No. of Pages : N/A

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.

Table of Content

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

List of Table

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