Published Study: Americans Tend to Be Spend-Happy with Tax Returns

The following information provides insights into Americans’ attitudes and opinions about tax refunds, credit scores, and financial responsibility. You will find overall key findings followed by the detailed findings per question afterwards.

budget tax

Key Findings

When it comes to their tax refunds, Americans are proving themselves to be spend-happy. Nearly three quarters of those who expect a tax refund this year plan to spend their refund on something (74%). Topping the list are non-essential items (35%) such as vacation (23%), entertainment like going out to movies or dinner (11%) and electronic (9%) and mobile (6%) devices.

Americans also revealed various regrets they had in with regards to spending a tax refund. One in five Americans who have ever received a tax refund admit they have later regretted what they purchased with their refund. One in ten (10%) regretted spending it on a vacation, which is ironically the #1 response for plans to spend this year among those who expect to receive a refund.

Interestingly, Americans who say they have a poor credit score are more likely that those who say they have an excellent credit score to agree that tax refunds are to be used for fun purchases (47% vs. 33%), would rather buy something for myself or a loved one from a tax refund rather than pay off a debt (51% vs. 20%), and to consider a tax refund as a bonus check that should be used to buy themselves something rather pay off a debt (39% vs. 22%). Not surprisingly, those with excellent credit scores are significantly more likely than those that have a poor credit score to agree that people who do not have good credit scores should pay off their debts with their tax refund before buying anything else(92% vs. 73%). Given this, it’s no wonder that roughly a quarter (26%) of those with a poor credit score admit they are not at all/not very financially responsible.

Detailed Findings

1. Which of the following, if any, do you plan to spend your tax refund on? Please select all that apply. 

Nearly seven in ten (69%) Americans expect a tax refund this year. Among them, three quarters (74%) plan to spend their refund on something, while 26% will not spend it on anything. Over one in five (23%) plan to spend it on vacation, 17% on home improvement projects, 14% on clothing. Roughly one in ten will spend it on entertainment such as movies or going out to dinner (11%), a vehicle (11%) electronic device (9%) or a computer (9%). 6% plan to spend it on a mobile device such as a smartphone or tablet, 5% say home appliance and a quarter (26%) plan to spend it on something else.

Interestingly, more than a third (35%) of Americans who expect a tax refund this year have plans to spend it on something non-essential – vacation, entertainment, electronic device or mobile device.

  • Those with good or fair credit scores who expect a tax refund this year are more likely than those with excellent or poor credit scores to spend it on something non-essential (41% and 43% vs. 33% and 32%, respectively).
  • 32% of those with a poor credit score who expect a tax refund this year plan to spend it on something non-essential.
  • Those with excellent or good credit scores who expect a tax refund this year are more likely than those with fair or poor credit scores to spend it on a home improvement project (20% vs. 12% and 14%, respectively).
  • Those with fair (18%) poor (14%) and good (12%) credit scores are more likely than those with excellent (8%) credit scores to spend on entertainment.
  • Those age 18-34 (44%) and 35-44 (38%) who expect a tax refund this year are more likely than those age 45+ (29%) to plan on spending it on something non-essential.
  • Men who expect a tax refund this year are more likely than women to have plans to spend their refund on an electronic device (11% vs. 7%, respectively).

2. Which of the following would you say best describes your current credit score? 

 85% of Americans were able to/chose to describe their credit score. 9% do not know what their current credit score is, 5% claim they don’t have one, while 2% declined to answer.

66% of Americans report they have an excellent/good credit score, with 43% saying excellent and 24% saying good. Roughly one in five (19%) Americans admit they have a fair/poor score, with 12% saying fair and just 7% admitting their credit score is poor.

  • Likelihood of reporting an excellent credit score increases with age [age 18-34 (53%), 35-44 (65%), 45-54 (67%), 55-64 (71%) and 65+ (83%)].
  • Those age 18-34 (12%) are more likely than those age 35+ (8%) to not know their current credit score.

3. Which of the following, if any, have you ever used your tax refund on, which you later regretted? Please select all that apply.

Among all Americans, 18% admit they have later regretted what they purchased. Nearly one in five (18%) admit they have later regretted what they purchased with their tax refund. Roughly one in ten (9%) regretted spending it on a vacation (ironically the #1 response for plans to spend this year among those who expect to receive a refund). 8% have regretted spending it on clothing, while just 1% say each of the following: a wedding, pool/hot tub, an engagement ring, plastic surgery and less than 1% say hair implants. 3% say they regretted spending their refund on something else.

  • Men are more likely than women to have later regretted something they purchased with their tax refund (21% vs. 16%, respectively).
  • Americans age 18-54 are almost twice as likely as their older counterparts age 55+ to have later regretted something they purchased with their tax refund (22% vs. 12%, respectively).
  • Those with an excellent credit score are the least likely to have later regretted something they purchased (79% excellent have not regretted any purchases vs. 69% good credit score, 70% fair credit score and 69% poor credit score).

4. How financially responsible, if at all, do you consider yourself? 

An overwhelming majority of Americans (94%) say they are very/somewhat financially responsible with 55% claiming they are very financially responsible and 39% reporting they are somewhat financially responsible. 6% admit they are not at all/not very financially responsible with 5% saying they are not very financially responsible and 1% reporting they are not at all financially responsible.

  • The likelihood of reporting they are very financially responsible increases with age [age 18-34 (40%), 35-44 (46%), 45-54 (56%), 55-64 (65%) and 65+ (75%)].
  • As expected, those with an excellent credit score are more likely to say they are very financially responsible (78% excellent credit score vs. 45% good credit score, 32% fair credit score and 25% poor credit score).
  • Roughly a quarter (26%) of those with a poor credit score admit they are not at all/not very financially responsible.

 5. How strongly do you agree or disagree with the following statements? 

“Those that do not have good credit scores should pay off their debts with their tax refund before buying anything else.”

  • 87% of Americans agree with this statement, while 13% disagree.
  • Older Americans age 65+ are more likely than their younger counterparts age 18-64 to agree with this statement (91% vs. 86%, respectively).
  • Those with an excellent credit score are more likely to agree with this statement (92% excellent credit score vs. 88% good credit score, 83% fair credit score and 73% poor credit score).
  • Almost three quarters (73%) of those with a poor credit score agree with this statement.

 

“I plan to spend all or some of my tax refund to pay down debt.”

  • 44% of Americans agree with this statement, while 27% disagree and 29% say not applicable.
  • Americans age 18-44 are more likely than those age 45+ to agree with this statement (54% vs. 36%, respectively).
  • Those with a good credit score (55%), fair credit score (60%) and poor credit score (59%) are more likely than those with an excellent credit score (34%) to agree with this statement

 

“Tax refunds are to be used for fun purchases.”

  • 40% of Americans agree with this statement, while 60% disagree.
  • Americans age 18-64 are more likely than those age 65+ to agree with this statement (43% vs. 28%, respectively).
  • Men are more likely than women to agree with this statement (43% vs. 38%, respectively).
  • Those with a good credit score (45%), fair credit score (50%) and poor credit score (47%) are more likely than those with an excellent credit score (33%) to agree with this statement.

 

“I would rather buy something for myself or a loved one from a tax refund than pay off a debt.”

  • 30% of Americans agree with this statement, while 70% disagree.
  • Americans age 18-34 are more likely than those age 35+ to agree with this statement (40% vs.26%, respectively).
  • Men are more likely than women to agree with this statement (32% vs. 28%, respectively).
  • Those with a good credit score (36%), fair credit score (36%) and poor credit score (51%) are more likely than those with an excellent credit score (20%) to agree with this statement.
  • Roughly half (51%) of those with a poor credit score agree with this statement.

 

 “I consider a tax refund as a bonus check that should be used to buy myself something rather than pay off a debt.

  • 30% of Americans agree with this statement, while 70% disagree.
  • Americans age 18-44 are more likely than those age 45+ to agree with this statement (36% vs. 25%, respectively).
  • Men are more likely than women to agree with this statement (33% vs. 27%, respectively).
  • Those with a good credit score (36%), fair credit score (33%) and poor credit score (39%) are more likely than those with an excellent credit score (22%) to agree with this statement.

 

“I rely on my tax refund to pay my bills, so a delay would affect my financial stability.”

  • 23% of Americans agree with this statement, while 57% disagree and20% say not applicable.
  • Americans age 18-44 are nearly twice as likely as those age 45+ to agree with this statement (31% vs. 16%, respectively).
  • Those with a fair credit score (34%) and poor credit score (40%) are more likely than those with an excellent credit score (15%) or good credit score (25%) to agree with this statement.
  • Two in five (40%) of those with a poor credit score agree with this statement.

 

Methodology

This survey was conducted online within the United States from February 3-10, 2015 among 4,031 adults ages 18 and older by Harris Poll on behalf of Lexington Law via its Quick Query omnibus product. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Poll avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Poll panel, no estimates of theoretical sampling error can be calculated.

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