How Will You Spend That Tax Refund?

In fact, according to an independent survey of more than 1,000 taxpayers conducted for CompleteTax (which describes itself as an online tax preparation and e-filing service for the do-it-yourself taxpayer), most (60%) expect to receive a tax refund, and more than half (51%) of those think it will be about the same as last year (nearly one-in-five are expecting it to be larger), with 25% expecting it to be less.      

Regardless of size, it doesn’t look like those refunds will do much to spur the economy; 41% indicated they planned to save it (though only 6% for retirement) and a comparable 41% are planning to use it to pay down debt.  Just 15% are planning to spend it, and the remaining 3% aren’t sure. 

More specifically, when it comes to how they will save, pay bills or spend their refund, taxpayers say:

• 35% – save in general
•  6% – save for retirement
• 13% – pay credit card debt
•  5% – pay mortgage debt
• 23% – pay other bills
• 12% – spend on essentials
•  3% – spend on non-essentials      

The survey did find that taxpayers’ plans for their refund vary by age and income. For example, saving their refund is the single most often response by older adults, with nearly half (49%) of taxpayers age 55-64 indicating this and 48% of those age 65 or older indicating they will save their refund. On the other hand, the most common response among taxpayers younger than 55 is to use their refund to pay bills.

When it comes to income, taxpayers earning $50,000 or more most often say they will save the majority of their refund while taxpayers with earnings below $50,000 most often will use their refund to pay bills.