So, you’re expecting a healthy refund from the IRS any day? If you’re like most Americans, you already know exactly how you’ll be spending it. But did you ever wonder what your fellow taxpayers spend their income tax refunds on? And how your plans compare to theirs? Wonder no more – we’ve got the inside scoop on your neighbors’ spending right here.
While most people imagine that vacations or big purchases are the most common things people choose to use their refunds on, those make up only a small percentage of the actual ways in which they’re spent. According to two separate USA Today surveys, in 2017, Americans were tightly focused on surprisingly responsible uses for their refunds, with almost half of respondents stating that they planned to save or invest their refunds, and about a third intending to use it to pay off debt.
Only about 10% had a vacation in mind, and another 10% were looking forward to splurging or putting it towards a big purchase like a car or home. But even there, a generational divide shows that it was primarily Baby Boomers – who generally have more disposable income anyway – who were opting for these choices, while Millennials and Gen Xers came in at only 2% and 7%, respectively, when it came to spending rather than saving.
Fast forward to 2018, and the new survey looks about the same (here). About 43% plan on saving their refunds, while 42% intend to pay off debt with it – a slight change in favor of paying down debts, but the focus on financial responsibility remains.
One popular use for income tax refunds that hasn’t made the surveys explicitly, however, is health care. According to a new study (found here), health care spending increases by 60% in the week immediately following an income tax refund disbursement. The top 3 areas where that spending is seen? Doctor visits, dental appointments, and paying off existing medical debt.
So if you’ve been feeling a little jealous of the luxuries you’ve been imagining all your friends and neighbors using their refunds on, while you have a more responsible – but boring – plan, you can set your mind at ease. They’re probably just going to the dentist and paying down their credit cards, too.
Of course, no matter what you plan to spend your tax refund on, it’s always a good idea to make sure you’re getting every cent the IRS owes you. If you filed your taxes with E-file, then you’ve got help getting your maximum refund. Our software guides taxpayers through the entire tax filing process using simple questions, to help ensure that you find eligible deductions and credits, and we’ve even got expert tax professionals available to help if you’ve got a question. So if you didn’t use E-file this year, make sure you do next year – we may just find you enough extra money that you can afford to put some of your refund in savings, and use the rest to splurge a bit, too.