01 May How Americans Spend Their Tax Refunds
While doing taxes is a chore that most people dread, it is usually a worthwhile exercise. According to the IRS, 111.9 million out of the 151.4 million individuals who filed their tax return in 2018 qualified for a refund, with the average refund amounting to $2,899.
With 2019’s tax deadline behind now behind us, let’s take a look at what people are spending their refunds on. According to a recent survey conducted by the National Retail Federation, 50 percent of Americans who expect a refund this year plan to save at least some of it. Paying down debt or covering everyday expenses are also popular ways to use tax refunds, while few people plan to use the new funds to indulge on luxuries such as vacations or splurge purchases.
This financial adviser is happy to see savings and debt reduction at the top of the list!
According to the NRF’s findings, 65 percent of Americans expect a refund this year, which is below the actual refund rates reported by the IRS for 2017 (74 percent) and 2018 (72 percent).
It’s worth remembering that a tax refund isn’t a gift, but a return of tax that you overpaid during the prior year. If you find yourself regularly receiving large refunds, it’s a sign that you need to adjust your withholding.
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