Most people who are expecting a tax refund this year or who already have gotten one plan to use the money to improve their personal finances.
About a third (34%) say they’ll use it to pay down their debt, and another third (33%) say they’ll save or invest the money, a new survey shows.
About a quarter (26%) say they will spend the extra cash on things such as food and utility bills, and 3% want to use it to go on vacation or a shopping spree, according to the survey of 1,003 adults, conducted for Bankrate.com.
The rest plan to do something else with it or don’t know what they’ll do.
Here is what the survey found:
Two-thirds (67%) of adults who are 18 to 29 years old expect to receive a tax refund this year or have already gotten one vs. 40% of folks 50 to 64.
When it comes to getting a refund, 38% of adults would like to receive a large one, 19%, a small refund; 27%, no refund and not owe any taxes; 7%, owe a small amount.
Some people think of having extra money withheld from their paychecks for income tax as a way to save their money. However, one thing to consider is that the IRS doesn’t pay any interest.
Instead, in the long run you’re probably better off to have the correct amount deducted for taxes and have any extra money automatically deposited in a bank or credit union where you may get at least some interest.
You can then use that money to create an emergency savings account or pay down credit card debt. A trusted CPA advisor can help you make decisions about where your refund should go.
The average refund so far this year is $2,988, up slightly from $2,969 at this same point last year, the IRS has said. That means many people are paying about $250 a month more in income taxes than they need to.
Other Survey Results
The survey also found that when people were offered a list of programs and asked what they would be most willing to pay higher taxes for:
25% said they would be willing to pay higher taxes in exchange for free college tuition for all students. About 43% of those ages 18 to 29 feel this way vs. only 9% of adults over the age of 65.
24% would be willing to pay higher taxes for repairing and rebuilding roads, bridges and mass transit.
22%, free health care for anyone who needs it.
4%, financial assistance for people who want to purchase or rent a home.
23%, don’t want to pay higher taxes for any of these.
If you have tax questions, Williams and Kunkel, CPA, LLP, CPAs can offer expert and well-experienced advice. Call us today in Flower Mound at 972-446-1040.
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Source: USA Today