Most Americans expect to get a tax refund this year, and 35 percent of them plan to spend all or part of it, according to survey sponsored by McLean-based Capital One Bank.
The average federal tax refund this year will be $2,803, according to the IRS. Capital One Bank’s third annual Taxes and Savings Survey found that 85 percent of Americans expect a refund.
“At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund,“ Mickey Konson, managing vice president for retail banking at Capital One, said in a statement. “People tend to think of their tax refund as free money or an annual bonus, which makes it very tempting to spend it right away, but remember, that refund is your own money – without added interest. Tax season is a great time to plan ahead, with an eye toward your financial goals.“
Of those that plan to spend part of all of their refund, the survey found that:
• 30 percent plan to spend it on everyday expenses and necessities,
• 23 percent plan to spend it on a vacation,
• 16 percent plan to spend it on clothing and accessories,
• 15 percent plan to spend it on an iPad, TV, smartphone or other electronics, and
• 16 percent plan to spend it on other major purchases.
The survey also found that almost a third of Americans were not aware that their income would decrease this year after expiration of the payroll tax holiday. Of those surveyed, 42 percent said they were “very aware” that their take-home pay would decline.
However, the survey found that 44 percent did not plan on changing their spending habits.
The survey was conducted by Braun Research of Princeton, N.J. using 1,006 interviews via landline and cell phones. The interviews were conducted between Feb. 5 and Feb. 10. Results have a margine of error of plus or minus 3.1 percentage points.
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