Some investors still do their own income taxes with paper and pen.
It is said that paying taxes is inevitable, but the process is made easier by doing them online, possibly even while wearing pajamas at home.
And that’s what many investors do (although not necessarily in their pajamas).
A Spectrem’s Millionaire Corner survey of investors shows that 41 percent of investors use an online tax preparation service similar to TurboTax to compute and file their annual tax return. That is more than the 37 percent who use a personal accountant to complete the process.
The popularity of online tax preparation services is growing. In 2012, 21 percent of Americans used online tax software to prepare their returns. Last year, more than 90 percent of all taxpayers filed their returns electronically, either through an online service or through the services of an accountant.
The online tax preparation services are most popular with those at the lower end of the net worth spectrum. Among investors with a net worth between $100,000 and $500,000, 52 percent used an online service and only 30 percent used an accountant.
At the other end, among investors with a net worth over $5 million, 22 percent used the online service and 67 percent used an accountant. Those investors are likely to have more complicated returns.
Age is also a factor. Among investors under the age of 40, 51 percent use the online service and 22 percent use a personal accountant. Among investors over the age of 60, 38 percent use the online service and 38 percent use a personal accountant.
Investors in the survey were given two other choices – doing the taxes themselves without the benefit of a computer, or using a tax preparation company such as H&R Block. Overall, nine percent said they did their taxes with paper and pen themselves, and 8 percent took their receipts and W2s into a tax preparation service.
Those tax preparation services were most popular with the under 40 crowd, with 16 percent saying they use them. Also, investors with a net worth under $500,000 were more likely to use the tax preparation service (14 percent) or do taxes themselves (16 percent).
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.