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Survey Finds Americans Plan To Save And Invest This Year’s Tax Refund

Many Americans plan to act responsibly when it comes to the money they receive from income tax refunds , according to a recent survey of 1,000 investors released by TD Ameritrade Holding Corporation (NYSE: AMTD). Nearly half (45%) of those surveyed expect to receive a tax refund, and among them, 61 percent plan to save or invest the money. Twenty-one percent plan to use the money to pay off debt, 19 percent plan to spend it on discretionary items and 18 percent expect to spend it on necessities.

The majority (62%) of respondents said they file their taxes on time, but not with any rush. Just 27 percent say they file as soon as they get their W-2s.

More than half of respondents actively manage their withholdings to control the amount of taxes withheld from their pay:
  • 30% manage withholdings in a way that allows them to get less money in their paycheck but get a larger income tax return at the end of the year
  • 27% manage withholdings in a way that allows them to get more money in their paycheck, even if it means they might owe income taxes at the end of the year

Gen Y More Likely to SaveGeneration Y was more likely than other generations to say they file their taxes as soon as they get their W-2s (44% vs. 26%). Why the hurry? Maybe because they’re the most likely to expect a refund (66% vs. 43%). And getting a refund may be just what they planned – Gen Y was also more likely to say they manage their income withholdings to get a larger refund at the end of the year (44% vs. 29%). Despite the rush to get the money, they are in no rush to spend it. Sixty-seven percent expect to save or invest their refunds.

“It’s encouraging to see that so many Americans have plans to save or invest their refund money,” said Lule Demmissie, managing director of retirement guidance for TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation. “But, there is one lesson some of them could learn – especially those in Generation Y. Rather than giving Uncle Sam extra money throughout the year, they may want to consider adjusting their withholdings so they have that money to invest throughout the year. A small increase in the amount you invest monthly can add up over time.”

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