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 Save
Generation 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.”
While Americans have plans for their personal income tax refunds, they also have some thoughts on how they’d like the U.S. government to spend tax revenue. If they had a say, public education (41%), health care (37%) and job creation (33%) would be their top priorities.
Further down the list was investing in the defense of the U.S. (29%), improving quality of health care (22%) and protecting the environment (18%).
New Tools to Help Make Tax Season Less Taxing
TD Ameritrade
has launched a
series of new tools and resources to help investors prepare for the
tax filing season. The site includes:
- a calendar of important tax dates
- a chart outlining when investors can expect to receive their various tax forms
- information on Cost Basis, and Understanding Tax Lots
- a webinar in Estate Planning Basics
- a downloadable 2014 Tax Guide
- a Minimum Required Distribution Calculator to help investors determine the required minimum distributions for their traditional IRAs and tax-deferred savings accounts
“Investors often have questions during the tax filing season because there are so many complex factors to consider, especially given the new cost basis rules that have gone into effect over the past few years,” said Becky Groves, director of tax services & government reporting at TD Ameritrade. “We’ve been very proactive about educating clients on these changes and other important things to consider at tax time, so we are very excited to launch this new online tax center to help simplify the tax filing process for our clients even more."
For more information visit https://www.tdameritrade.com/education/taxes.page.
For the latest news and information about TD Ameritrade, follow the Company on Twitter, @TDAmeritradePR.
TD Ameritrade does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.
About TD Ameritrade Holding Corporation
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investors and independent registered investment advisors (RIAs) have
turned to TD Ameritrade's (NYSE: AMTD) technology,
people
and education
to help make investing and trading easier to understand and do. Online
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or www.amtd.com
for more information.
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About Head Research
Head Research is a division of Head
Solutions Group (U.S.) Inc., a leading market research partner for
Financial Services companies in North America. With offices in New York,
Toronto and Montreal, Head delivers the deep customer insights that
increase institutional knowledge and propel business action. TD
Ameritrade and Head Research are separate and unaffiliated firms and are
not responsible for each other’s services or policies.
About the 2013 Survey
An online survey was conducted among
N=1,000 U.S. residents who hold an investment account at a brokerage
firm or mutual fund company, from December 2-3, 2013, by Head Research
on behalf of TD Ameritrade, Inc. Sample was drawn from major regions in
proportion to the U.S. census. The statistical margin of error for
results of this study is ±3.1% (assumes panelists do not differ from
nonpanelists and respondents do not differ from nonrespondents). This
means that, in 19 out of 20 cases, survey results for questions based on
all respondents (N=1,000) will differ by no more than 3.1% in either
direction from what would have been obtained by measuring the opinions
of all U.S. residents who hold investment accounts at brokerage firms or
mutual fund companies.
Generational Birth Year Breakdown
Lost Generation: 1900 to 1945
Baby
Boomers: 1946 to 1964
Gen X: 1964 to 1976
Gen Y: 1977 to 1989
Gen
Z: 1990 to 1995
Contacts:
For Media:
Christina Goethe,
201-369-8541
Communications & Public Affairs
christina.goethe@tdameritrade.com
On
Twitter @TDAmeritradePR
or
For
Investors:
Jeff Goeser, 402-597-8464
Investor Relations &
Finance
jeffrey.goeser@tdameritrade.com