Are you expecting an income tax refund? If so, you’re not alone. Based on IRS statistics, there were nearly 142 million federal tax returns filed last year, of which nearly 109 million (ca. 79%) of resulted in an income tax refund. The total amount refunded was a little more than $362 billion, for an average of $2, 994 per refund.
Wow. That’s a huge amount of money overall, and a tidy sum on a per capita basis. So… If you’re expecting a refund, have you given any thought as to what you’ll do with it?
Over the past month or so, we’ve been running a poll about this very topic over in the right sidebar. The poll asked:
If you’re expecting a tax refund, how do you plan to use it?
To date, over 300 people have responded, and the results are quite interesting. Here’s a summary of the findings:
- 47.6% will use the money to pay off bills
- 29.6% will invest the money
- 12.9% will spend it on day-to-day living expenses
- 9.9% will spend it on vacation or other non-essential purchases
All in all, I was pleased to see that over three-quarters of all respondents (77.2%) will be using their tax refunds to improve their future, either by paying off bills or by investing the money. Given the recent economic issues that we’ve all been dealing with, I had expected to see a higher percentage using it to cover day-to-day expenses.
As for us, I’m still not sure if we’ll be receiving an income tax refund. I’m planning on pulling together or tax paperwork over the weekend, and meeting with our tax guy* shortly thereafter. If we do get any money back, however, we’ll be adding it directly to our investment portfolio.
What about you?
Are you expecting a tax refund? If so, how are you planning on spending it? Will you stash it in your savings account? Use it to help you get out of debt? Put it toward your mortgage? Add it to your retirement savings? Start a college fund? Or will you do something else entirely?
If you’re looking for specific ideas, please you might be interested in reading my list of ten things to do with your tax refund.
*Note: Yes, we now use a “tax guy” – but that’s another story for another day. 🙂