If self-employed individuals are not on your radar, perhaps they should be. New research from Intuit Self Employed uncovers some very telling facts about this segment of taxpayers:
- 36% of self-employed workers admit they don’t pay taxes.
- Nearly 1 in 10 self-employed workers don’t know about the recent tax reform.
- More than a fourth of self-employed workers think the tax reform will cause them to pay more in taxes.
- 14% of self-employed workers are currently behind on their taxes.
In summary: these people really need our help! Especially since that same research found that a third of self-employed workers have been audited by the IRS.
About the Survey
The survey was conducted in March 2018 for for QuickBooks by Pollfish. They surveyed 501 self-employed workers and covered tax habits, challenges, and opinions related to the tax industry. The data reveals some insightful things about this particular type of taxpayer that could be useful for marketing purposes! Here are some interesting things we found.
Their Tax Challenges
One of the most important things to know about a customer segment you are trying to reach is what their biggest challenges. Knowing their challenges will help you convey how your services will solve their pain points. The first thing that stuck out from all the data was this: When asked to list their top challenges, doing taxes was a top 5!
The top 5 tax-related challenges facing self-employed workers:
- Filing forms correctly (30 percent)
- Keeping track of paperwork (30 percent)
- Estimating how much tax to pay (23 percent)
- Saving enough money for taxes (20 percent)
- Finding deductions (17 percent)
Tax Paying Habits
So you know taxes are a struggle, here are some tax paying habits we found interesting.
- Over two-thirds of self-employed workers are not filing taxes using software.
- 31 percent still file using paper.
- 32 percent file using an accountant.
The most common reason people hire an accountant is because they don’t want to do their own taxes.
- 35 percent of those who use an accountant have never done their taxes and don’t want to.
- 18 percent of those who use an accountant don’t want to waste time doing taxes themselves.
- 17 percent of those who use an accountant tried and failed to do their own taxes.
Here’s another interesting trend: 42 percent of workers 55 years and older use tax software vs. 33 percent of 18- to 24-year-old workers. In the 18- to 24-year-old group, 33 percent file their taxes on paper!
Self-employed tax payers also admit to getting behind easily because they underestimate how much they have to pay, can’t afford the tax bill, didn’t know they needed to pay taxes, or just plain forgot. One-third of self-employed workers say they have previously gotten behind, are currently behind, or will be behind on paying their taxes.
- 14 percent are currently behind on paying their taxes.
- Nearly 1 in 5 (19 percent) have previously been behind on paying their taxes.
- 10 percent expect to be behind on paying their taxes in the future.
Knowledge On Tax Reform
As we mentioned in a previous blog post, 83 percent of small business owners feel as though they don’t understand how the Tax Cuts and Jobs Act will impact their business. For the self-employed, the feeling is mutual even though this segment is going to be the biggest beneficiaries of the new law. According to the survey, nearly 1 in 10 self-employed workers didn’t know there was any tax reform.
- 28 percent think they will pay more in taxes because of the recent tax reform.
- 27 percent don’t think it will impact how much they pay in taxes.
- 16 percent think they will pay less in taxes.
- 20 percent don’t know how it will impact their taxes.
- 9 percent didn’t know there was any tax reform.
The top 5 tax areas self-employed workers want to know more about:
- Anything and everything tax-related
- Deductions, write-offs, and tax breaks
- Why they pay so much in taxes
- Industry-specific tax information
Bottom line: Self-employed taxpayers are behind on their taxes, are likely to be audited, and are in need of information. If you’re looking to increase your revenue during the off-season, reaching out to this segment to help them file late returns, amend returns, or do some tax planning may be fruitful.