Tax day is fast approaching, and for most filers, that means a refund is also likely.
This year, many taxpayers plan to save the refunds they receive in an effort to increase their personal wealth.
Some 46% of people plan to save their refunds, according to a LendingTree survey of more than 1,000 taxpayers conducted online Feb. 7-10. That’s higher than the previous two years: 41% in 2021 and 40% in 2020, according to LendingTree.
More than 81 million Americans filed their 2021 tax returns by the April 18 deadline, and the IRS sent a total of more than $188 billion in refunds through March 25, the agency reported. . So far, the average individual reimbursement is $3,263, about 12% higher than last year.
For many people, a tax refund is the biggest check they receive all year and can be a crucial part of their budget.
In addition to saving, Americans are also looking to use their repayments to pay down debt and boost family budgets, the survey found.
“It’s good to see that people have used [a refund] or intend to use it primarily to save and pay off debt, especially because things are getting more expensive by the day and debt is only going to get more expensive as the [Federal Reserve] continues to raise rates,” said Matt Schulz, chief credit analyst at LendingTree.
The data also showed that younger workers, women and low-income people were more likely to use their repayments to save, pay off debt or for necessary expenses.
“One of the big lessons of the pandemic is how important savings are,” Schulz said. “A lot of people have really learned that lesson – you don’t know when that rainy day is coming, and you don’t know how bad the storm is going to be.”
More than 60% of Gen Z respondents, ages 18-25, said they would put their repayment money into savings, compared to 47% of millennials and 41% of baby boomers. Gen Zers were also more likely to invest their refunds, the survey found.
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Women were more likely than men to use a refund to pay off existing debt. Some 41% of women said they would repay managing their debts, compared to 34% of men.
This may be due to necessity, Schulz said, as women tend to struggle more financially than men – they often earn less, are more likely to be single parents and may take time to care for children. or other family members.
Others use their refunds just to get by. A third of those who earned less than $35,000 last year said they would use their refund to pay for necessities such as rent and groceries.