Fewer people plan to use their income tax returns this year to pay down debt or catch up on bills and will instead put that money away for a rainy day or make a big purchase like a car or house, according to the results of a survey released by NerdWallet. But people better get moving, because a lot fewer people have filed their 2020 tax returns, compared with how many had filed at this point a year ago.
On average, 50% of consumers are expecting to receive a refund for their 2020 income taxes, and the average refund they are expecting is about $2,000, according to the survey.
As of March 5, nearly 56 million returns had been received by the Internal Revenue Service and 49 million of those had been processed. Those numbers are down 18% and 25% respectively from the same point last year, according to data released by the IRS (thanks to Rick Bonitzer for sharing the link in the AccountsRecovery.net Slack channel. Not yet a member? Click here to join!). The average refund is $3,036, down 3% from $3,129 a year ago.
When people do get their refund, they have slightly different plans for it than they did a year ago. Only 32% are going to use it to pay down debt, compared with 38% a year ago. And 30% are planning on using their refunds to catch up on bills, compared with 39% last year. Those who are going to deposit their refunds into their emergency funds or retirement savings increased to 58% from 55%, and those who are planning to pay for a major expense, such as a home or auto repair increased to 14%, from 13%.
