Thrifty Thinking: Tax Filing Survey

Results of a new survey from the National Endowment for Financial Education® (NEFE®) on tax filing in 2019, find that among the 74 percent of U.S. adults who have filed taxes, two in five (42 percent) are happy with the outcome, while an additional 25 percent are neither happy nor unhappy. One third (33 percent) of those who have filed say they are unhappy with the outcome of their tax filing this year.

“The results don’t seem to align with what we’ve been hearing anecdotally about people’s feelings of filing taxes under the new tax law. Despite a perceived unhappiness, the good news is the largest proportion of people say they’re satisfied with their tax filing outcome,” says Billy Hensley, Ph.D., president and CEO of NEFE. “More good news is that people continue to report they are doing positive things with their refunds, like building savings and paying down debt.”

The survey was conducted online in March 2019 by The Harris Poll on behalf of NEFE, among more than 2,000 U.S. adults.

How the New Tax Law Changed Outcomes

Significant changes to the federal tax law in 2019 led to speculation that many taxpayers would end up owing money unexpectedly, but according to the survey, less than one in 10 (7 percent) of those who filed paid more on their federal taxes this year than they typically have in the past. Among those who filed their federal taxes already this year:

• About three-quarters (73 percent) received a federal refund.
• Roughly one in five (21 percent) owed taxes.
• Five percent broke even.

Comparing this year to prior years, the survey found:

• A quarter (26 percent) received about the same federal tax refund as in other years.
• Another quarter (24 percent) received less in a refund this year.
• Fifteen percent received a higher federal refund this year.

How People Pay Taxes

More than half (53 percent) of those who have filed federal and/or state taxes as of March 18, 2019, owe money this year. Half of U.S. adults who owe on taxes will not pay their taxes from savings, but will rely on other methods.

Among those who owe: 

• Fifty percent plan to pay from savings.
• Nearly one in five plan to use credit cards (18%).
• Sixteen percent make scheduled tax payments (16%).
• One in 10 plan to borrow from family or friends (10%).
• Another 10 percent plans to take out some other type of loan.

“Tax planning is one area where individuals can impact their own outcomes in a direct way,” says Hensley. “If you’re having to borrow money to pay for taxes year after year, then you might consider adjusting your paycheck withholding or setting up automatic savings transfers. It’s a lot easier to save a bit at a time from each paycheck than to come up with a large sum of money at once.”

What People Do With Their Refunds

About four in five U.S. adult taxpayers who have already filed their federal and/or state taxes (81 percent) are receiving a refund. Many refund recipients plan to save it and/or pay down debt.

• Nearly half (47 percent) say they will put their refund in savings.
• Thirty-eight percent plan to pay down or pay off debt.
• More than one in 10 plan to use it to travel (15 percent).
• Fifteen percent plan to put it toward home improvements and 12 percent will use it to make a car repair.

“Getting a large payout such as a tax refund is a great opportunity to make progress on financial goals such as paying down debts and starting an emergency savings fund,” Hensley says.

For tips on what to do with a tax refund and how to adjust tax withholding, visit www.smartaboutmoney.org.

Survey Methodology

This survey was conducted online within the U.S. by The Harris Poll on behalf of the National Endowment for Financial Education March 14-18, 2019, among 2,015 adults ages 18 and older, of whom 1,468 had filed taxes already at the time of the survey. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Please contact for complete survey methodology, including weighting variables.

 

About the National Endowment for Financial Education (NEFE)

NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.