Households That File Income Taxes Electronically

Death and taxes are constants. Since 1955, we have been able to pin the latter to a specific date each year: 15 April. In 1986, US the Internal Revenue Service took advantage of increased computer use by taxpayers to implement electronic filing as a cost-saving measure; the following year, it added electronic direct deposit.

Despite the increase in tax-code complexity, ubiquitous internet access—93% of US households have access—enables a growing proportion of households to file income tax returns easily, electronically eliminating the need for a trip to the post office. For households expecting a tax refund, direct deposit not only provides an incentive to file electronically but also eliminates the need for a trip to the bank.

In 2004–05, MacroMonitor reported that only 7% of households (approximately 8.7 million) filed taxes electronically. Between 2010–11 and 2012–13, the incidence of households' filing electronically (from 23.1% to 22.4%, respectively) remained fairly stable at 29 million households. However, the 2014–15 MacroMonitor reports an increase in electronic-tax-filing households to one-quarter (24.7%), or 33 million households.

Interestingly, it is not the archetypical young, single filers who dominate the electronic filers; almost half are older than age 50. Fewer electronic-filer households file an individual return (45%) than file a joint return (55%). Of households that used online financial services in the past two years, 77% filed an e-return; 75% used a computer to do so. The difference between the proportion of households that filed electronically and the proportion that used a computer is households that used a smartphone (1.4%) or a tablet (2.6%) to e-file. As desk-free devices gain wider use for financial services, the number of e-filer households using mobile devices will increase. Although electronic tax filing can be an annual event, these e-filer households are good prospects for other critical financial services whose delivery is through well-designed, convenient, and simple technology.