How Americans plan to spend their 2020 tax refund
The average refund last tax season was about $2,725
The majority of Americans are looking forward to receiving a tax refund this year – with some expecting a particularly large check from the IRS – and they already have an idea of how they will spend it.
The average refund last tax season was about $2,725, as the IRS doled out about 95.7 million checks. It processed about 130.7 million returns as of April.
According to a survey conducted by CreditKarma, about 44 percent of taxpayers expect that their tax refund will be their biggest paycheck of the year. This year, 46 percent of taxpayers are looking for a check that will be at least $1,000.
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Here’s a look at what people plan to spend it on, according to the survey:
Savings
About 30 percent of people said they planned to save the money, with half of this group of respondents saying they plan to build up their emergency savings.
Ten percent of people cited economic concerns – specifically worries about an impending recession – as the main reason they will save their refunds this year.
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Debt
Nearly one-in-four people said they will use their refund cash to pay down debts. More than half of this group was specifically targeting credit and debit card debt.
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Other spending obligations
Thirty-two percent of people said they plan to put the money toward their bills, like rent, groceries and other necessities.
Indulgence
Only 10 percent of survey respondents said they plan to spend their expected refund on an item or experience they want.
The good news? Despite the fact that many people expect to receive a refund, if they did not receive one – as happened to some people last tax season – just 24 percent of people said it would leave them in a bad financial situation.