Americans Will Use Tax Refunds to Pay off Debts
The most popular way Americans will use their tax refunds is to pay down their debt, according to a new survey.
The poll, by the personal finance site Bankrate.com, found that 34 percent of Americans who expect a tax refund said they would use the money to pay off their debts, followed closely by 33 percent who plan to save or invest the refund money.
Two-thirds of millennials expect to receive a tax refund this year, more than any other age group. The likelihood of receiving a tax refund decreases with age: only 35 percent of people age 50 and older anticipate getting money back from the government.
In addition, 43 percent of millennials are willing to pay higher taxes in exchange for free college tuition for all students, compared to only 20 percent of other adults. Senior citizens are significantly more likely than other age groups to support higher taxes for repairing and rebuilding roads, bridges and mass transit.
Even though many tax practitioners advise their clients to adjust their W-2 withholdings to avoid a large tax refund because it amounts to an interest-free loan to the government, 38 percent of Americans said they prefer to receive a big refund, while 19 percent prefer a small refund.
“It’s surprising that so many people still prefer to get a big refund, rather than adjust their withholding to get their money throughout the year,” said Bankrate.com tax analyst Kay Bell in a statement. “You'd think during lean times, they'd need the money more to meet their monthly expenses. But old and bad tax habits die hard.”
Twenty-two percent of all Americans would welcome higher taxes if they would lead to free health care for anyone who needs it.
The survey was conducted for Bankrate by Princeton Survey Research Associates International and can be seen in its entirety here.