Don't Mess With Taxes

By the end of last week (March 21), the Internal Revenue Service had sent out just more than 55.7 million refunds. The average check amount was $3,221.

The latest refund amount is slightly less — $50 smaller — than the amount I noted on Monday in my post about how to spend your tax refund.

But even with a small drop, a lump sum payout from Uncle Sam of more than three grand is welcome. That’s especially the case for many who participated in a recent Intuit Credit Karma survey.

Almost half (49 percent) of the survey respondents said they are more dependent on their tax refund to make ends meet this year than they have in the past.

Millennials more money-stressed: That financial pressure is felt even more by millennials, the generation born between 1981 and 1996. Fifty-seven percent of this population segment said they need their tax refund to cover daily expenses.

Those costs are why most of those who were surveyed earlier this month, or 61 percent, had already filed their federal tax returns. Forty-seven percent already had their tax refund in hand at the time of the survey.

And 64 percent of those who had received their tax money didn’t wait for the official U.S. Treasury payment. They used a service or product, for example, an advance loan or prepaid debit card issued against the expected refund amount, to access their refund early.

As expected, 72 percent of the millennials facing a financial crunch took the early tax cash option.

Generational necessities: While millennials were notably in need of the tax money, this year’s tax refunds served as a lifeline for many across all generations who are struggling financially, according to the Credit Karma survey results.

More than one-third (37 percent) of millennials said they needed their refund early to buy essential items like groceries.

Thirty percent of millennials and Gen X, generally ages 45 to 60, said they needed the tax money to pay important bills.

More than a quarter (28 percent) of Gen Z, teens and twenty-somethings, needed their refund to pay for expenses they’ve been delaying, such as a car repair.

A quarter of Gen Z and millennials also said they needed the money to pay down high-interest debt.

“Free money” for smaller group: There were, however, some in the Credit Karma survey who viewed their federal tax refunds as a way to spend on wants, rather than needs.

Nearly one-third (31 percent) see the money they get back after filing as “free money” to be used in various, more enjoyable ways.

Sixteen percent said they will spend their refund on travel; 14 percent on non-essentials; and 12 percent on recreational experiences, such as concerts or sporting events.

Never big enough: Finally, one sentiment was found amount all surveyed, regardless of how they chose to spend their refund. The refund amount wasn’t as much as they had hoped to receive.

Forty percent of taxpayers who received a refund were disappointed by the size of the refund they got this tax season. Forty-six percent reported that it was lower than last year’s.

You also might find these items of interest:

• 8 ways to spend your tax refund
• Tracking down your federal tax refund
• How to get your tax withholding just right

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