Most Americans don't expect their tax refunds to last long.
In fact, 1in 3 taxpayers plan to spend their refunds immediately, a new survey from tax preparation company Jackson Hewitt found. The company surveyed 1,000 American adults in March 2022.
Another 22% of Americans plan to spend their refund within three to six months, while 23% plan to save it until they "need it most during the year." The rest of the respondents surveyed do not expect to receive a refund.
The average tax refund issued so far this tax season is $3,263, according to IRS data.
But Americans aren't planning to spend their refunds on electronics and dinners out: 31% of respondents said that theirs will go toward major bills, including rent, medical bills, debt and utilities. And 15% said that they will spend their refunds on "essentials," such as gas and groceries.
Only 5% of taxpayers surveyed said they planned to spend their tax refund on entertainment expenses such as vacations and concerts, while 2% said they would put it toward a major life event such as a wedding or home purchase.
That Americans are planning to spend their refunds on essentials is nothing new, says Mark Steber, Jackson Hewitt's chief tax information officer. "Big refunds are a good thing for many millions of Americans because they take them and they spend them wisely," he tells CNBC Make It. "They're not spending it in Vegas or having a big pub crawl."
Still, Steber encourages taxpayers receiving refunds to treat themselves with 10% of it, if they can afford it. "Do something frivolous," he says. "Buy yourself a big TV or take that family trip."
But whatever you do, don't wait to send in your return. The penalty for not filing your taxes by April 18 is 5% of your unpaid taxes for each month that the return is late, maxing out at 25%. You could also rack up 0.5% in penalties each month unless you pay an estimated amount by Tax Day.
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