Days of Splurging Tax Refunds Are Over: It’s Now About Saving or Paying Bills, CompleteTax Survey Finds

Most Taxpayers Expect Refund; But One in Four Say It Will Be Less Than Last Year; Older, Wealthier Likely to Save Refund – Others Will Pay Debt

(RIVERWOODS, ILL., February 16, 2010) – Most people are looking forward to getting a tax refund, according to an independent survey of more than 1,000 taxpayers conducted for CompleteTax®, an online tax preparation and e-filing service for the do-it-yourself taxpayer.

However, many taxpayers expect their refund won’t be as big as in the past, and they don’t expect to have much fun with it, based on findings from the CompleteTax Tax Refund Survey, conducted by Infogroup | ORC . The survey also found refund plans vary by age and income.

“People are not looking at their tax refund this year as a windfall to go out and splurge. Rather, it’s a necessity to help build or rebuild their savings or reduce their debt,” said Gary Lundberg, product management director for CompleteTax.

Refund Expectations

According to the CompleteTax Tax Refund Survey, the majority of taxpayers (60 percent) expect to receive a tax refund. However, one-third (33 percent) say they will not get a refund, and the remainder are unsure.

Among taxpayers expecting a refund, most expect it to be about the same as last year. However, among those who think it will change, more expect their refunds to be smaller compared to last year. Specifically, taxpayers say their refund will be:

About the same as last year, 51 percent;
Smaller than last year, 25 percent;
Larger than last year, 19 percent; or
Not sure, 5 percent.

“Taxpayers want to make sure they’re doing everything they can to get the biggest refund they deserve,” said Lundberg. “Both your personal situation and the tax code change every year, so you want to make sure you know where you can take advantage of deductions and credits that can help lower your taxes.”

Refund Plans

The survey found that taxpayers are equally split in how they plan to use the majority of their refund, with 41 percent indicating they will save it and 41 percent saying the will use it to pay debt. Only 15 percent say they plan to spend the majority of their tax refund and 3 percent were uncertain.

More specifically, when it comes to how they will save, pay bills or spend their refund, taxpayers say:

Save in general, 35 percent;
Save for retirement, 6 percent;
Pay credit card debt, 13 percent;
Pay mortgage debt, 5 percent;
Pay other bills, 23 percent;
Spend on essentials, 12 percent; and
Spend on non-essentials, 3 percent.

The survey also found that taxpayers’ plans for their refund vary by age and income. For example, saving their refund is the single most often response by older adults, with 49 percent of taxpayers age 55-64 indicating this and 48 percent of those age 65 or older indicating they will save their refund. The most common response among taxpayers younger than 55 is to use their refund to pay bills.

When it comes to income, taxpayers earning $50,000 or more most often say they will save the majority of their refund while taxpayers with earnings below $50,000 most often will use their refund to pay bills.

The average refund last year was nearly $2,800. However, the days of using it for a vacation or a big-screen TV seem to be long-gone,” said Lundberg. “Building savings and reducing debt are now the priorities.”

Looking for Fast Refunds

The survey found that the importance of reducing debt may also be reflected in the fact that nearly one-half (48 percent) of taxpayers say getting their refund as quickly as possible is an important factor when preparing their taxes. According to Lundberg, the three simplest steps to speed a refund are:

Go online to prepare your taxes - many people can complete their tax returns in just a few hours or less; some also can qualify for free online tax prep.

Stay online to file electronically - filing electronically eliminates the time it takes for a mailed return to reach the IRS and be processed.

Have your refund electronically deposited - e-file combined with direct deposit can mean having your refund in as few as eight days.

“Direct deposit also is a great way to responsibly manage your refund,” said Lundberg. “You can choose to have your refund split and electronically deposited in up to three accounts. So you could put part of your refund into savings, part into checking and part into an IRA or even a savings bond.”

About CompleteTax

CompleteTax (www.CompleteTax.com), an online tax preparation and e-filing service for the do-it-yourself taxpayer, is the smart, simple solution for people who want to get their taxes done quickly, easily and accurately and maximize their tax refund. CompleteTax offers comprehensive resources for preparing and e-filing both federal and state income tax returns. CompleteTax is developed by CCH, a Wolters Kluwer business (CCHGroup.com), a leading provider of tax, accounting and audit information, software and services. Wolters Kluwer is a leading global information services and publishing company (www.wolterskluwer.com).

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EDITORS’ NOTE: Survey findings are available at http://www.cch.com/completetax2010/TaxRefundSurvey.pdf.