Online tax filing on the rise, retail on the decline, data finds

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As Monday marks Tax Day in the U.S., millions of Americans have hopefully filed their federal and state taxes for another year. And according to data from advertising technology company Exponential, online tax filing and tax filing software is on the rise, while retail and walk-in tax services are declining in popularity.

Using data provided by Experian and Axciom from 2017 tax returns (for the 2018 filing period), Exponential examined correlations in tax filer characteristics to determine how likely tax filers were to appear within a particular tax filer segment compared to other tax filers.

When breaking down tax filing methods by age groups, those 65 years old and over were found to be the most likely to use walk-in tax services (compared to a scant 3.7 percent for those aged 21-29). Tax-filing software was a popular option for Gen X and boomers, with 59.5 percent and 55.9 percent of those aged 50-64 and 65 years old and over, respectively, likely to opt for this method. Online tax filing proved very popular for younger tax filers, as those aged 21-24 were 82.4 percent more likely to file online, followed by 24 percent of those aged 25-29. Notably, boomers were 31.3 percent less likely to use online tax filing services.

Exponential also studied U.S. metro areas most likely to file their taxes via certain filing methods. Washington, New York City and Los Angeles were found to have filers who were the most likely to use an accountant, while Detroit, Dallas/Ft. Worth and Houston were most likely to see their citizens utilize walk-in services. Minneapolis, Philadelphia and Phoenix were the most likely metro areas to use online tax-filing services.

Other notable findings include:

  • Truck drivers (42.4 percent) and boomers (31.3 percent) were less likely to file their taxes online. Real estate investors (30.8 percent), pet owners (29.2 percent) and those with a college education (21.3 percent) were more likely to file online.
  • Teachers (43.1 percent), people who watch the Oscars (34.6 percent) and people who work at nonprofits (30.8 percent) were likely to file using tax software. Organic food purchasers (29.2 percent), small business owners (14.1 percent) and renters (14 percent) were less likely to use tax software.
  • Department store shoppers (41 percent), financial analysts (32.5 percent) and those with an annual income over $250,000 (28.5 percent) were more likely to file with an accountant. Those with a high-school diploma (76.5 percent), teachers (59.5 percent) and government workers (28.1 percent) were less likely to use an accountant.
  • Divorcees (233.7 percent), those with a home value of less than $100,000 (86.8 percent) and those with a net worth of less than $25K (81.7 percent) were more likely to use walk-in tax prep services. Executives (43.6 percent), those who work in IT (19.9 percent) and those with good credit (11.7 percent) were less likely to use walk-in services.

For more information, head to Exponential's site here.

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