More than a third of U.S. adults expect to spend their tax refunds this year on meeting everyday expenses, according to a new survey by the American Institute of CPAs, as the expiration of the payroll tax cut takes a bite out of workers’ take-home pay.

Taxpayers who expect to receive a refund this year are most likely to save it or put it toward day-to-day expenses like food, gas or housing as many contend with lower take-home pay brought about by higher payroll taxes, according to the survey, which was conducted for the AICPA by Harris Interactive for National Financial Literacy Month.

The telephone survey, conducted among 1,011 U.S. adults between March 14 and March 17, found that 43 percent of those who expect to receive a refund consider it more important to their financial well-being this year than in years past. Nearly half of U.S. adults, 46 percent, expect to use the refund for their savings; 37 percent will use it for day-to-day expenses; and a third, 33 percent, will use it to pay their debts.

Workers saw their paychecks shrink in January as the payroll tax cut expired, returning Social Security withholding to 6.2 percent from 4.2 percent and effectively reducing take-home pay for most workers. More than 7 in 10, or 71 percent, of those employed have felt at least some impact from the paycheck reduction, according to the survey results, and nearly all of those, 96 percent, have made some kind of adjustment. According to the survey, 70 percent are putting less in their emergency funds; 51 percent are cutting back on cable and digital entertainment; 45 percent are contributing less to their retirement accounts; and 17 percent are skipping payments on credit cards, utilities, rent or mortgages.

“Last year the IRS sent checks totaling nearly $310 billion to taxpayers, underscoring the significance of tax time to American households,” said AICPA National CPA Financial Literacy Commission chair Ernie Almonte in a statement. “This year, in the wake of a paycheck squeeze, many Americans are counting on those refunds for relief— a way to bolster savings or shore up budgets.  It’s critical that they have a well thought out plan for using the funds to maximize the benefit to their financial well-being.”

Members of the National CPA Financial Literacy Commission offer the following tips for taxpayers who receive a refund this year.

Prioritize. When contemplating how to allocate your tax refund, remember this hierarchy: 1) basics 2) emergencies 3) debt.  If you are struggling to cover basics such as food, shelter or healthcare, then you should put your tax refund toward those needs first. If you’re covered there, then put the money in your emergency fund. Having cash available to cover unanticipated expenses should be a top priority.

Make a split. Those with credit card debt are sometimes eager to put all their tax refund money toward the balance. But there’s a better way. Split the money between your emergency fund and your credit card bill. This way you reduce your liabilities and have cash on hand for life’s unexpected expenses – and they will come – so you don’t have to take on more debt.

Tackle high interest. Deciding what debt to pay? Pay the credit card balance or other debt with the highest interest rate first. The faster you can attack debt with the highest cost, the further you can stretch your dollars in your quest to be debt free.

Look long term. There’s sometimes a tendency to use tax refunds for big splurges. If you’re lucky enough to have a healthy emergency fund and no credit card debt, consider using your refund to make an extra mortgage payment or a contribution to a retirement account to benefit your future.

The CPA profession has a comprehensive financial education program—360 Degrees of Financial Literacy—to help Americans achieve long-term financial success. The Web site offers tools, calculators and advice to help Americans understand and manage their financial needs during 10 life stages, from childhood to retirement.

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