More Americans are going to save their tax refunds this year than they have in over a decade.
A new TV and car sound nice, but shouldn’t we save for the future? Americans say yes.
Two-thirds (65 percent) of Americans will receive a tax refund this year and 49 percent are going to save it, says a joint study from the National Retail Foundation, and Prosper Insights and Analytics. That’s the largest amount in 12 years.
“Tax return season is a time when consumers plan and prioritize financially, whether it is paying down debt or saving for a rainy day,” says Matthew Shay, NRF president and CEO. “With the passage of tax reform and the expectation of more disposable income, we expect to see consumers prioritizing how and when they spend their hard-earned dollars.”
Of those who don’t plan to save their refund, only 35 percent will pay down debt — which shows improvements in the U.S. economy. That’s the lowest it’s been in two years and much lower than it was in 2009 (48 percent), during the recession.
Only 22 percent plan to spend their tax refund this year. If 65 percent of Americans will receive a tax refund, that means some don’t plan to file a tax return this year.
Who isn’t filing?
NRF surveyed over 7,600 Americans, and 35 percent will not receive a refund this year. Over a million Americans haven’t filed their taxes since 2014, according to Forbes. That leaves the IRS with $1.1 billion in unclaimed tax refund money.
Those who haven’t filed a return and feel they may qualify still can, and typically have a three-year window to do so, according to Forbes.
This year, 59 percent of Americans have already filed, and most use some kind of technology to file. Sixty-seven percent file online, 39 percent use computer tax software, while only 20 percent hire an accountant or go to a tax preparation service (17 percent).
And the age group with the oddest tax filing behavior? Millennials.
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Millennials and taxes
Debt.com has previously reported that millennials act strange around tax season.
They’re the generation most likely to file a paper return and mail it to the IRS, according to marketing and consulting firm Voccii. Less than one in 10 millennials file a paper return, while no one over the age of 35 does.
Millennials are most likely to file early. Over half (54 percent) say they like to file their taxes early, compared to 36 percent of everyone 35 and older. NRF and Prosper’s study had similar findings.
“Younger consumers are being more mindful about their hard-earned money, especially those 18-24 who have already filed their taxes this year, higher than any other age group,” says Prosper executive VP of strategy Phil Rist. “Although this group is focused on allocating a portion of their refunds to savings, they are also more likely to use them for everyday expenses compared with any other age group.”
Millennials may be the first to file, because they stress more than everyone else about filing their taxes, according to H&R Block. Three quarters (74 percent) of millennials say they stress about filing their tax returns, says a study of 1,000 millennials between the ages 18-36.
What are they stressed about? Mainly making a mistake (48 percent), but another quarter worry they won’t receive their full refund.
Millennials said the same in a similar study, this one from NerdWallet. Yet again, millennials (80 percent) stressed most around tax season, compared to those over 55 (60 percent). And 17 percent of millennials were twice as likely as everyone over the age of 35 (eight percent) to file a paper return.
“Who knew so many millennials would be so old-fashioned?” says Liz Weston, NerdWallet columnist and personal finance expert. “But in some ways, it makes sense: Millennials tend to have less experience with a deeply confusing tax code, less cash to seek professional help and less need for the complicated returns that having children or a mortgage can bring.”
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Article last modified on March 29, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Americans Plan to Use Their Tax Refunds Wisely - AMP.