Interesting results from a Wall Street Journal/Harris Poll, reported in Many Americans Don’t Take Steps To Minimize Income-Tax Liability, by Beckey Bright:
About two in five U.S. adults did nothing this year to minimize their U.S. income tax liability, a new Wall Street Journal Online/Harris Interactive personal finance poll shows. The online poll, which surveyed 1,954 U.S. adults who have filed or plan to file a tax return for 2005, found about 39% of those polled didn’t or won’t do anything to minimize their tax bill.
Among the interesting results:
"When filing your taxes this year did you/do you plan to…?"
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91%: Filed/Plan to File Taxes This Year
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35%: Utilize an accountant or tax service to prepare your taxes
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34%: File them yourself using tax preparation software or an online tax preparation program
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12%: File them yourself using hard copies of IRS forms
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8%: Have a friend/family member file them for you
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3%: Other
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9%: I Will Not File Taxes This Year
Of those who filed/plan to file this year: "Which of the following did you do this past year or will you do when filing to minimize your tax liability?"
- 61%: Plan To Do Something To Minimize Tax Liability
- 42%: I contributed to charities
- 29%: I deducted/plan to deduct state and local taxes
- 21%: I gave deductible monetary gifts
- 19%: I itemized/plan to itemize certain purchases as work expenses
- 12%: I itemized/plan to itemize travel or commuting as a work expense
- 7%: I purchased an IRA.
- 5%: I timed the sale of stocks or other assets to minimize my tax liability
- 4%: I filed/plan to file taxes separately, rather than with my spouse
- 12%: Other
- 39%: I Did Not/Do Not Plan to Do Anything to Minimize My Tax Liability
2 responses to “WSJ: 39% Don’t Take Steps To Minimize Taxes”
To compare tax filers’ plans/expectations with reality, based on 2002 tax returns:
* While 42% claim to have contributed to charities, only 31% actually took the deduction.
* The expectation of 19% planing to itemize work expenses seemed very high since I thought that most employees have very limited employee expenses, but in 2002 more than half of tax filers who itemized DID claim an Unreimbursed Employee Business Expense.
* While 4% expected to file Married Filing Separately, less than 2% of returns actually were filed using that status (if both spouses filed MFS, then less than 1% of couples filed using that status).
* Considering that 30% of tax filers had zero tax liability, it isn’t surprising that 39% had no plans to do so.
Personal observation: Many tax fliers (plus those without a filing requirement) don’t have the luxury of having a tax minimization plan; they’re too busy trying to survive. The WSJ survey appears to have excluded many of these people.
Correction to my previous comment: Regarding “Unreimbursed Employee Business Expense,” more than one-third of those itemizing took this deducion (rather than more than one-half).