Having a plethora of options for how to use their tax refunds, more Americans this year are opting to stash their cash away for a rainy day. According to NRF’s Tax Returns Survey, 46% of those expecting a refund this year will put their money into savings, up from 44% last year and the highest percent in the survey’s history. Two-thirds (66.6%) of those surveyed are expecting a refund this year.
“Financial security is top-of-mind for all Americans, and refunds can play a huge role in helping achieve that,” said NRF President and CEO Matthew Shay. “Whether consumers use a refund to pay down debt, bulk up their savings, or buy that big-ticket item they’ve been saving for, a check from Uncle Sam, large or small, goes a long way these days.”
As for other ways consumers will use their refunds, 37.7% will pay down debt, and one-quarter (25.3%) will use it towards everyday expenses. One in 10 (10.7%) will treat themselves and invest in a major purchase, and 12.8% will spend their refunds on a vacation.
Young adults between 18 and 24 will make the most of what Uncle Sam gives back this year, with nearly six in 10 (57.7%) planning to contribute to their savings accounts, higher than any other age group. They are also the most likely to use their refunds for everyday expenses (34%) and to purchase a big ticket item such as a new television or piece of furniture (18.3%). Three in 10 (30.2%) will use their checks to pay down debt, second to last behind those 65 and older (27%).
“Young adults today are extremely smart about their money, and will look for ways to reap the benefits of their hard work that comes from their refunds,” said Prosper’s Consumer Insights Director Pam Goodfellow. “It’s also likely that 18 to 24 year olds have learned from their parents the valuable lesson of saving for a rainy day, thanks in large part to the Great Recession and current economic conditions.”
According to the survey, nearly two-thirds (64.9%) of consumers who plan to file taxes will do so online, up from 62.5% last year and the highest percent in the survey’s history. Additionally, 38.4% will prepare their taxes on their own using computer software, up from 37.3% last year. Others will manually prepare their taxes (11.9%), use a tax preparation service (17.4%), use an accountant (22.6%) or look to a spouse, friend or other relative for help in doing their taxes (9.7%).
While many have already filed their taxes (22.7%), more than one-third (36.7%) will file in February, and another quarter (25.9%) will file in March. 14.7% will wait until the last minute and file in April.[Source: "Tax Return Survey." National Retail Federation (NRF)/Prosper Insights & Analytics. 19 Feb. 2014. Web. 19 Feb. 2014.]