Six in Ten Plan to Save/Invest Tax Refund

April 2, 2014 ( - Nearly half (45%) of individuals surveyed expect to receive a tax refund this year, and among them, 61% plan to save or invest the money.

According to a survey of 1,000 investors released by TD Ameritrade Holding Corporation, 21% plan to use their refunds to pay off debt, 19% plan to spend it on discretionary items and 18% expect to spend it on necessities. The majority (62%) of respondents said they file their taxes on time, but not with any rush. Just 27% say they file as soon as they get their W-2s.

More than half of respondents actively manage their withholdings to control the amount of taxes withheld from their pay. Thirty percent indicated they manage withholdings in a way that allows them to get less money in their paycheck but get a larger income tax return at the end of the year, and 27% manage withholdings in a way that allows them to get more money in their paycheck, even if it means they might owe income taxes at the end of the year.

Generation Y (born 1977 to 1989) was more likely than other generations to say they file their taxes as soon as they get their W-2s (44% vs. 26%). This could be because they are the most likely to expect a refund (66% vs. 43%). Gen Y was also more likely to say they manage their income withholdings to get a larger refund at the end of the year (44% vs. 29%). Sixty-seven percent of Gen Y respondents expect to save or invest their refunds.

While Americans have plans for their personal income tax refunds, they also have some thoughts about how they would like the U.S. government to spend tax revenue. If they had a say, public education (41%), health care (37%) and job creation (33%) would be their top priorities. Further down the list was investing in the defense of the U.S. (29%), improving quality of health care (22%) and protecting the environment (18%).

An online survey was conducted among 1,000 U.S. residents who hold an investment account at a brokerage firm or mutual fund company, December 2 and 3, 2013, by Head Research on behalf of TD Ameritrade, Inc. The survey sample was drawn from major regions in proportion to the U.S. census.