With signs of an improving economy, many Americans are now keen to use their tax refunds to treat themselves or their families to a major purchase such as a new television or furniture. According to NRF’s 2011 Tax Returns Consumer Intentions and Actions Survey, conducted by BIGresearch, 13.2% of Americans will spend their refund on a big ticket item, up from 12.5% in 2010.
But with the economy also serving as a reminder that it’s best to be financially prepared for the worst, more people will also put their refunds away for a rainy day (42.1% vs. 40.3 percent in 2010).
“Despite the difficult unemployment situation across the country, Americans receiving a tax refund this year seem eager to plough this money back into the economy,” said NRF President and CEO Matthew Shay. “With sales momentum continuing to build, NRF is becoming more bullish about the economic recovery.”
While some will toss frugality out the window, there are still 41.9% of consumers who plan to pay down debt. Other ways consumers will use their refunds include vacation (11.9%), and everyday expenses (29.7%).
Unsurprisingly, the number of people who file their taxes online continues to increase. This year, 57.6% of U.S. taxpayers will file their taxes online, up from just 50.1% in 2007. Additionally, 35.2% will prepare their taxes using computer software, 21.5% will use an accountant, 19.3% will use a tax preparation service, 10.9% will have a friend, spouse or other relative prepare their taxes for them and 13.2% will prepare their taxes by hand.
“Many Americans have spent the last few years paying down debt with their tax refunds, but for some, it’s the perfect time to buy something nice for a change,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “Others are also looking to the future though, by putting their ‘free money’ in a savings account, with the recession serving as a perfect reminder of the need to be prepared.”
According to the survey, 63.9% of Americans will have filed their taxes by the end of February, meaning that many tax returns have already been received or are on the way. An additional 21.1% will file in March and 15.0% will wait until the last minute and file in April.
Two-thirds (66.2%) of tax payers are expecting a refund this year, up from 65.5 percent last year, but down from the percentage expecting a refund in 2009 (68.4%).[Source: “2011 Tax Returns Consumer Intentions and Actions Survey.” The National Retail Federation (NRF). 22 Feb. 2011. Web. 24 Feb. 2011.]