The economic downturn has forced many families to cancel the lawn service and fire the housekeeper.

The latest casualty: tax preparers.

TurboTax, the leading manufacturer of tax software, said Wednesday that sales of its consumer tax products rose 10% through March 13 from the same period a year ago. That coincides with steep declines in traffic at some big tax-preparation chains:

•H&R Block reported this month that the number of tax returns prepared at its retail outlets fell 9.4% from the year-ago period.

•Jackson Hewitt said last week that the number of returns prepared by its outlets fell 18% through Feb. 28. The second-largest tax-preparation company projected that the total number of returns it prepares this tax season will decline by 17% to 19%.

Block said its business has been affected by high unemployment, which has led to an increase in non-filers. At Jackson Hewitt, a lack of funding forced it to cut back on refund-anticipation loans, which may have caused the loss of some of its customers.

But in a statement last month, H&R Block Chief Executive Russ Smyth said the shift to do-it-yourself tax preparation also has hurt.

The average cost of hiring a professional to prepare a tax return with itemized deductions is $229, according to the National Society of Accountants. Tax software prices range from less than $20 to more than $70. Taxpayers with adjusted gross income of less than $57,000 can prepare and file their federal tax returns at no cost through the Free File program at irs.gov.

“Just like more people are bringing their lunch to work — it’s the same kind of thing,” says John Hewitt, chief executive of Liberty Tax Service, the third-largest tax-preparation franchise. Hewitt says Liberty’s tax-return business is up 8% this year, but that’s down from an increase of 16% for the same period last year.

Professional preparers warn that do-it-yourself taxpayers often overlook money-saving tax breaks or commit errors. Trudy Moore, an enrolled agent who prepares taxes in Stevensville, Mont., recalls what happened a few years ago when clients let their tech-savvy children do their taxes: “I spent the next year and a half fixing what those kids did.”

SOURCE USA TODAY 03/18/2010