U.S. Markets closed

Americans Plan to Spend Their Tax Refunds on This

Juliette Fairley

NEW YORK (MainStreet) — Taffy Vanderpool is looking forward to receiving her tax refund so that she can take a much needed vacation from her job as a court reporter. Although she has $3,000 in credit card debt that is begging to be repaid, the 29-year-old feels a change of pace is more important.

"I need a break and I'm only getting $1,000 this year so it's going towards my mental health," Vanderpool told MainStreet.

If she happens to receive more than $1,000, Vanderpool says she will reluctantly set some money aside for debt repayment.

"I look forward to my tax refund all year so that I can splurge not pay off debt," said Vanderpool.

A Taxsoftware.com survey found that 11% of Americans are earmarking their tax refunds for a vacation this year compared to 10% two years ago.

"Our survey results are consistent with similar polls we've conducted in recent years and continue to demonstrate that Americans place a high priority on using their refunds to help improve their personal lives," said Mickey Macedo, spokesperson with Taxsoftware.com, which launched the first iPad app for federal tax returns in 2011.

The study further found that 32% of Americans plan to use their anticipated federal and state tax refunds to help pay off debts compared to 29% last year in 2012.

"For millions of taxpayers, improving their own financial situation is a top priority," Macedo said. "This is a powerful indication of consumer caution and conservatism in the face of a recovering economy."

About 27% of taxpayers will earmark their refunds for savings or investments, 11% for purchases, 9% for home improvements and 5% equally for paying mortgages and student loans.

"When it comes to a tax refund, there is no better time than now to save and invest," said Jordan Niefeld, a CPA with Gerstle Rosen & Goldenberg. "With the markets at some of its highest levels ever and a bullish economic forecast in the near term, investors at all levels should prudently strategize ways to turn their current year tax refunds into longer term financial growth."


Another Taxsoftware.com survey revealed that a majority of Americans are concerned that their personal and financial information would not be kept private and secure if they file their state and federal tax returns on the Internet.

Apprehension over security and privacy issues relate to every high-tech device people use to file tax returns.

About 54% now have some level of concern about using smart phones, 53% are concerned about using desktop computers, 52% have some level of concern about using their laptop computers and 41% are now concerned with using iPads.

"While Internet-related security issues are weighing more heavily on the minds of taxpayers today, it's important to keep the latest poll numbers in perspective," Macedo said. "When our survey was first conducted in 1997, 83% had worries about Internet-based tax filing. The lesson here is that over time tens of millions of people have grown comfortable filing their taxes online."

--Written by Juliette Fairley for MainStreet

EXCLUSIVE OFFER: See inside Jim Cramer’s multi-million dollar charitable trust portfolio to see the stocks he thinks could be potentially HUGE winners. Click here to see his holdings for FREE.