15% of Us Think Tax Refunds Are for Fun

NEW YORK (TheStreet) -- Filing and paying taxes can be the financial equivalent of root canal.

That is, unless you qualify for a tax refund. That makes it more like another welcome sign of spring, like pitchers and catchers heading to Florida and Arizona or the first green shoots popping out of the ground.

And of the 143 million tax forms filed in 2012, approximately 80% earned a refund .

What is interesting, as Americans emerge from one of the worst sustained economic periods in U.S. history, is what consumers will do with their refunds this year.

TD Ameritrade (AMTD) has taken a look at the issue and concluded that about half of Americans will be banking their checks from Uncle Sam this year, or at least plan on using the money to pay off debt.

A significantly smaller percentage of tax refund recipients will actually spend the money.

Here is how T.D. Ameritrade breaks it down:

• 47% of recipients will save their refund cash.
• 44% will use some of the money to pay off debt.
• 28% will use the cash on spending, mostly on "necessities."
• Only 15% will use their tax refund money to buy "discretionary" items.

The survey suggests Americans have emerged from a half-decade economic downturn with a more prudent, serious view of their own personal financial situations. Now, if "bonus" money turns up, consumers are much more likely to save it than spend it.

"It's good to see that people are more likely to save their tax refund or use it to pay down debt rather than perhaps spending it unwisely," says Lule Demmissie, managing director of investment products and retirement at TD Ameritrade. "We would also encourage people to consider investing the money for the future. Contributing lump sums like year-end bonuses or tax refunds can be a good way to bolster a retirement account." (Note that TD Ameritrade earns a fee if you invest money in one of their retirement accounts. It's still a good idea to save for retirement, but the firm does have a financial stake in its clients doing so.)

Demographically, single women and married men are the most likely candidates to spend their tax refund. In fact, only 37% of single women will save their refund, compared with 56% of married women. Yet 54% of single men will save their refund cash, compared with 41% of married men.

TD Ameritrade calls the gap between the genders, and between singles and married couples, an "interesting shift."

The survey does provide more clarity along generational lines, as younger Americans are much more likely to bank their tax refunds. All told, 58% of Generation Y Americans will save the money, compared with just 36% by Generation X and 40% by baby boomers.

Apparently, younger adults have learned a hard lesson from the Great Recession.