Will Your Tax Refund Help You Accomplish Financial Goals?
It’s that time of the year again, when millions of people start to think about filing their taxes. This often involves dreading the collection and organization of paperwork in addition to already worrying about owing Uncle Sam more money. However, the majority of Americans will receive a tax refund and say they will use it toward a responsible financial goal.
Eighty-five percent of respondents in a study by Fidelity think they will receive a tax refund this year, but nearly half believe their tax obligations will be higher with the result of the changes over the highly debated fiscal cliff. Last year, about 75 percent of taxpayers received a tax refund, and the average amount was close to $2,700.
The majority of people claim they will either save their tax refunds or use them to pay down debts. In fact, 33 percent of respondents say they intend to pay off debts, while 15 percent are planning to use the money for retirement savings. Another 9 percent have the funds earmarked for college savings, and 22 percent are planning to save for something else. Only 2 percent say they will use the money for vacation plans, and 6 percent will use the refunds to help with daily expenses.
More people than ever are concentrating on financial resolutions this year. More than half of Americans are focusing on short-term and long-term money goals in 2014. In comparison, only 35 percent said they considered financial resolutions in 2009. “These findings suggest individuals are taking more control over financial matters, leading them to feel better about their personal situations, which is a great way to ring in the New Year,” said Ken Hevert, Fidelity’s vice president of retirement products.