Most people get federal tax refunds. And for a lot of them, it’s a substantial amount.
Through February, the Internal Revenue Service says it issued more than 41 million refunds with the average check exceeding $3,000.
So what are folks doing with that money?
A couple of recent surveys found they are being practical.
Savings and debt reduction: GoBankingRates.com found that most Americans will use their tax refund money to add to their savings and pay down debt.
Individuals’ personal financial situations, however, determine which of those two refund options they choose first.
Folks making less than $50,000 are more likely to use their tax refund to pay off debt, according to GoBankingRates.
Those in the $50,000 to $149,999 income range, however, tend to put their tax refunds into savings.
And the survey found that age matters, too.
GoBankingRates found that younger millennials — those ages 18 to 24 — are the most likely to save their tax refunds. More than half, 54 percent, said they plan to stash their tax cash this year into a savings vehicle.
As for paying down debt, the survey found that slightly older millennials — ages 25 to 34 — are the most likely to use tax refunds to whittle down what they owe. Gen Xers — individuals ages 35 to 54 — are the second most likely to pay down what they owe with the money they get back from the IRS.
And it’s older refund recipients, taxpayers age 65 or older, who are more likely to use a refund to splurge. Hey, you can’t take it with you!
More paying down debt: The National Retail Federation’s (NRF) tax refund poll showed similar results.
The retail trade association’s survey, conducted by Prosper Insights & Analytics, found that 48 percent of tax refund recipients plan to put the money into savings, second only to last year’s record high 49.2 percent.
In addition, NRF/Prosper found that 35.5 percent will use their tax refund money to pay down debt, up from 34.9 percent last year but far below the peak of 48 percent seen in 2009.
Do your refund plans follow the GoBankingRates and NRF poll findings?
Both surveys obviously contain a lot of figures, but the one that gets this week’s By the Numbers honor is the $3,071 average federal tax refund issued so far this year.
That’s a welcome amount regardless of how you choose to use it.
You also might find these items of interest:
- 5 tax refund myths busted
- State refunds likely to be delayed, too
- $1 billion in refunds awaiting taxpayers who didn’t file 2013 returns