A federal tax refund is the largest lump sum of money received in a year by the average American household.
- An estimated $230 billion1 in federal tax refunds will be issued this year to the nation’s taxpayers.
- Approximately $140 billion1 will be in consumers’ pockets by Feb. 15.
- In 2012, the average federal tax refund averaged $2,7002, equaling more than a month’s worth of income for two-thirds of taxpayers or more than three months of groceries for the average family of four.
Refunds are especially vital for the estimated 40 percent3 of U.S. households living paycheck-to-paycheck.
- Of those living paycheck-to-paycheck, only 4 percent3 are confident in their ability to plan for their financial future.
- More than one third of households admit to rarely being able to save money (not including a 401K) if any3.
Refunds are the primary reason taxpayers file returns by mid-February.
- Those taxpayers that filer prior to Feb. 15 mirror the profile of a paycheck-to-paycheck household (see Table 1).
- Approximately 84 percent of taxpayers filing in Jan. through Feb. 15 receive a refund, compared to only half of those who file in April4.
Consumers typically make the largest dent in their credit card debt in the first quarter of the calendar year, fueled by the increase in income due to tax refunds.
- In 2012, Americans planned to spend an average of $8595, adding to the average consumer credit card debt of $8,7216.
- The average tax refund could cut almost a third of the average credit card debt.
Early tax filers use tax refunds to pay down debt, cover the costs of every-day living.
- 42 percent of early tax filers plan to use their refund to pay down debt and cover the costs of rent, food and utilities. (See Table 2)
TurboTax Customer Survey – 2012
1 American Tax & Financial Center estimate based on IRS data for 2011, 2012
2. Average federal refund amount – IRS tax year 2011
3 Intuit market research study – 2009
4. TurboTax Tracking Survey of U.S. Households – 2011
5. American Research Inc. Survey – 2012
6 Mint.com – January 2013