Changes in Tax Preparation Methods, 1993-2003

Few taxpayers still prepare their returns the old-fashioned way - with pencil and paper. The percentage of individual taxpayers who prepare their own returns without software dropped from 40 percent to 13 percent in the last decade, while paid preparer and software use increased. In tax year 2003, 62 percent of taxpayer used paid preparers and an additional 25 percent used tax software. Use of tax software and paid preparers is one way of reducing the compliance burden of an increasingly complex Federal income tax, but some components of burden, such as recordkeeping, will remain no matter how we prepare returns.