Tax season is upon us… and while some will be receiving a surprise tax bill (again) others are anticipating a refund check. But do Americans actually understand how taxes work?
Well, a recent survey conducted by TopCashback.com, the USA’s most generous cashback site, found that although one in four (25 percent) Americans don’t comprehend how taxes are determined, 85 percent do know where their tax refunds come from.
Tax Season, Stress Season.
While 56 percent of respondents look forward to tax season, 46 percent admit that filing taxes is stressful.
Do you file taxes early?
- Yes (67 percent)
- No (33 percent)
How will you file your taxes this year?
- Via a tax software program or websites like TurboTax or H&R Block (58 percent)
- Via professional help from an accountant or tax preparer (32 percent)
- Manually by filling out forms and following instructions provided by the IRS (Six percent)
- Choose not to file taxes (Three percent)
Last Year vs. This Year.
Refund checks are never guaranteed — especially after last year’s tax reforms, which left 30 million people owing Uncle Sam — so it’s no surprise that 24 percent of Americans adjusted their tax withholdings after last year.
Did you receive a tax refund last year?
- Yes (70 percent)
- No (30 percent)
What do you expect this year?
- A tax refund (79 percent)
- A bill from the IRS (21 percent)
Top strategies used to avoid going into the next tax bracket:
- None — couldn’t do anything to avoid going into the next tax bracket (53 percent)
- Maximized 401(k) contributions (28 percent)
- Increased retirement contributions (21 percent)
- Made an extra mortgage payment (Nine percent)
Tax Refund Plans.
For many Americans, the annual check from Uncle Sam offers them a chance to better their finances, while some may have other plans in-sight.
Top tax refund plans:
- Pay off debt (43 percent)
- Put it towards my savings (37 percent)
- Invest it (Nine percent)
- Make a big purchase (Five percent)
- Take a trip (Five percent)