More Consumers Plan to File Their Taxes Online

Nearly one-half of consumers plan to file their federal taxes online this year, up from 34 percent in 2005, according to a new survey.

The survey, by the Conference Board and TNS, found that convenience and speed are two of the main reasons why consumers are increasingly using online filing. However, while concerns about conducting financial transactions online have gradually abated over the last five years, concerns have spiked this past year.

Forty-two percent of the survey respondents expressed concerns about filing online, up from approximately 36 percent last year. Conversely, those who claimed they are “not very concerned” or “not concerned at all” amounted to 33 percent, down from 38 percent last year. More women than men expressed concern with conducting online financial transactions.

This year, 47 percent of consumers intend to file their federal taxes online. Once they file online, they generally don’t return to traditional filing. Nearly half of online filers have been filing their taxes online for five or more years, more than double the percentage in 2005.

Among those not filing electronically (38 percent offline and 16 percent still undecided), the most common reason is that the individual does not do his or her own taxes. Concern about submitting personal information online is the second most likely reason. Another notable barrier is the complexity of the return.

Among those filing online, 38 percent intend to use a professional service. Another 38 percent plan to use do-it-yourself tax software. One-quarter of filers intend to use IRS e-file.

Among those who intend to file online, the top reasons include: online filing is easier than filing by paper (63 percent); a faster refund (51 percent); and comfort with submitting data online (32 percent). When asked for the main advantages of online filing, 55 percent said that it is quicker, 18 percent mentioned the fact that the software directs the user through the process, and 10 percent said it is cheaper than filing by paper.

Direct deposit was chosen by three out of four online tax filers as the preferred method for receiving their refunds. Only 14 percent chose to receive their federal refund by check.

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