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Most plan to be responsible with tax refund

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Three out of every four people who expect income tax refunds this year say they will save the money or use it to pay off some debt.

Those were the results of a survey conducted by personal finance website GOBankingRates.com. Using a Google Consumer Survey, GOBankingRates.com asked 5,000 respondents, "What do you plan on doing with your tax refund?" The response breakdown is as follows:

  • I do not receive a tax refund — 30%
  • Pay off debt (loans, credit cards, etc.) — 27%
  • Put in savings — 25%
  • Put toward a vacation — 9%
  • Make a major purchase (car, home, etc.) — 5%
  • Splurge on a purchase (TV, shoes, etc.) — 4%

The answer choices were displayed randomly and respondents were limited to one response each. The percentages above and all further survey analysis excludes the 34.8 percent of respondents who chose "none of the above."

"Tax refunds are income that falls outside of Americans' typical paychecks, so even though it's earned and well-deserved, there is definitely a temptation to view it as 'free money' that can be splurged or even wasted," said Elyssa Kirkham, the lead GOBankingRates finance reporter on the study.  

"It's really encouraging to see, however, that most people are planning to use a tax refund to better their financial situation by saving or paying off debt," she said. "Using a tax refund this way will buy the taxpayer more financial security and peace of mind, instead of a one-off splurge that soon loses its value or is forgotten."

Additional Findings:

  • Only one in five Americans plans to spend tax refund money.
  • Older respondents are twice as likely to not expect a tax refund as their younger counterparts.
  • Respondents ages 18 to 24 are over twice as likely as baby boomers to splurge or make a major purchase with their refunds.
  • Of those expecting a tax refund, women selected "pay off debt" 20 percent more frequently than men did.

For more insights on the survey findings, visit: 
http://www.gobankingrates.com/personal-finance/first-thing-americans-do-tax-refund/ 

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