‘The IRS reports over a billion dollars in unclaimed refunds every year.’
đŸ’¡What To Know:
- Tax Day 2024 is Monday, April 15th.
- The average Gen Z American is expecting less than $1,000 in tax refunds.
- A TurboTax expert says young adults saving for retirement could score bigger returns.
NEW YORK — Tax Day is on the way, and Gen Z is not ready for the IRS. New research shows only 44 percent of young Americans understand the tax filing process.
The survey of 2,000 adults between 18 and 26 looked at how young people are feeling about tax season this year, findings that over half (56%) admit they’re intimidated by the process. Interestingly, the same percentage of respondents “very much” look forward to filing their taxes (29%) as those who aren’t looking forward to it at all (28%). Some people must think they’re getting a pretty big refund.
Despite the anxiety, Gen Z is looking to get ahead of the curve — by the time of the survey, nearly a fifth of respondents already filed their taxes for this year (17%). Those who haven’t filed yet aren’t lagging too far behind, with 50 percent aiming to file their taxes by the end of February at the latest.
Thirty-eight percent wish they could use the time they spend doing their taxes to be with loved ones or watch TV (37%) instead. For some, cleaning their home (31%) or working (26%) sounds more appealing than the task of filing their taxes. Still, the deed needs to be done, as 62 percent acknowledge that it’s better to file taxes early.
Conducted by OnePoll for TurboTax, the survey reveals that 53 percent anticipate getting a tax refund in 2024. The average Gen Z American who is expecting a refund, estimates that they’ll get back $935.80, and more than a quarter (27%) hope to get back more than $1,500.
When it comes to tax season, Gen Z gets information about filing their taxes from their parents and family members the most (48%), followed by social media (31%) and friends (29%). However, respondents know they have more to learn. Of those who filed taxes previously, just 22 percent feel “much more confident” this time around.
Some areas that they need more education in are the process itself, with 30 percent expressing uncertainty that filing early makes any difference. More than two-thirds of young Americans were unsure or didn’t know that receiving a tax refund while making less than the IRS’ income requirement was possible (68%).
One in four feel uneducated about the different ways they can save on their taxes when filing (26%). Just 38 percent of respondents knew that having a child could help save on their taxes and even fewer knew that a new job can have an impact on their taxes (36%).
These changes are especially important to keep top of mind for Gen Z, as many have gone through tax-changing shifts over the past year like getting a new job (34%), investing (21%), or starting a self-employed business (17%).
“There are many ways for Gen Z to save on their taxes. The survey reveals more than two-thirds of respondents were unsure or didn’t know that receiving a tax refund while making under the IRS income requirement was possible. However, the IRS reports over a billion dollars in unclaimed refunds every year,” says spokesperson Lisa Greene-Lewis, a CPA and tax expert at TurboTax, in a statement.
“One of the biggest mistakes I’ve seen is Gen Z not filing at all and leaving money on the table, especially since they’re constantly making life moves that can lead to tax benefits that can help their tax outcome.”
When it comes to their refund, Gen Z Americans would be most inclined to spend it on necessities like bills (45%) or groceries (31%). Others would treat themselves a bit, opting for new clothing or shoes (28%) or putting it towards a new vehicle (16%).
On average, those surveyed would be interested in saving about 37 percent of their refund and investing 23 percent of it, although 27 percent shared they wouldn’t invest any of it.
“With credit card debt on the rise among Gen Z, they could use some of their refund to pay down debt,” says Greene-Lewis.
“Although it may seem early, they could also begin investing in their retirement. That move may help them save on their taxes since you can contribute up to $7,000 to your IRA for 2024 and potentially deduct your contribution on your taxes,” the tax expert continues.
“You can also get the little-known credit called the Saver’s Credit which is up to $1,000 for single filers and up to $2,000 married filing jointly for just investing in your retirement. A win-win!”
Survey methodology:
This random double-opt-in survey of 2,000 Gen Z respondents was commissioned by TurboTax between Jan. 30 and Feb. 4, 2024. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).