With a major tax reform bill passed in early 2018, taxpayers are having to deal with a whole new set of rules when filing a return this tax season. Even tax experts have found it difficult to predict exactly how the new tax code would affect filers’ total tax bills or refunds.
CouponFollow wanted to see how this year’s tax season is shaping up, so we conducted a survey to find out. With Tax Day drawing and the tax season almost over, many people already have a clearer view of their new tax situation. See what our tax survey results reveal about how people are filing taxes and using their tax refunds in 2019.
Key survey findings
- Fifteen percent of filers say they don’t know when Tax Day is.
- Two-thirds of taxpayers have negative feelings about Tax Day, with annoyance being the most common emotion associated (27.6%) with this date.
- Filing with a tax preparation software is the most popular method (39.7%), followed by hiring a tax professional (33.4%).
- Most often, taxes take around one to two hours to complete — and more than half (54.3%) of filers say that collecting all their tax documents is the most time-consuming part.
- Nearly half of taxpayers, 44.5%, don’t know what the Trump tax reform is, or how it impacts their finances
- Of the 70% of taxpayers expecting to receive a tax refund this year, only 18.9% expect to get a larger refund this year. A higher number, 26.5%, say they’ll get a refund this year — but it will be smaller than what they received last year.
- Most people expecting a refund plan to save it, 29.9%, or use it to pay off debt, 28.3%.
- When shopping with a tax refund, the most popular categories to spend on are household items such as furnishings and decor, and food including dining out.
- More than half of tax filers don’t know enough about taxes. This includes 32.8% who say they know a little about taxes but wish they knew more and another 23.8% who have no tax knowledge.
- The vast majority of people, 94%, believe that high school students should be taught about taxes.
Annoyance and stress are the most common emotions about taxes
When it comes to the deadline to file taxes, also called Tax Day, not everyone knows when it is.
In fact, we found that 14.7% of people don’t know when Tax Day is. This is despite the fact that Tax Day traditionally falls on or around the same day every year: April 15. The remaining 85.3%, however, do know when Tax Day is.
Whether they know when it is or not, most people aren’t excited for the event — 62.2% associated a negative emotion such as annoyance, stress, confusion or panic with Tax Day. Annoyance is the most common emotional response to Tax Day overall, with more than a quarter (27.6%) naming this as their biggest emotional reaction to this event.
Another quarter (25.9%) say they associate a positive emotion with the day, such as relief (17.9%) or joy (8%).
Two in five people use tax preparation software for taxes
Using a tax software is the most common way people are filing their taxes for the 2019 tax season, with a total of 39.7% choosing this method. Of people who are using tax software to complete taxes, a small majority are using a paid tax software (21.4%) while the remaining are using free tax software.
Among those planning to use a paid tax software, costs can also vary widely. In fact, just over a quarter (25.7%) of people who said they are paying for tax software expect to spend $101 or more on this service. Another 29.6% say they’re spending between $51 and $100, while a similar amount of 30.8% spent or plan to spend $26 to $50.
With so many spending more than $50 or even more than $100 on tax preparation software, it can make sense to look for discounts and deals when you can. Choosing a simpler tax prep software can mean paying less. Once you select your preferred tax software, you can also look for coupon codes and discounts through CouponFollow to find more ways to save.
After filing with tax software, the next-most-popular method for preparing taxes is hiring a professional — a third (33.4%) of people choose this option.
Another 13.8% prepare their taxes on paper or through IRS’s e-file option. And lastly, a similar number of people (13.1%) get a family member or friend to complete their taxes for them.
Taxes take at least an hour — most of which people spend gathering paperwork
On top of the cost of preparing taxes, the process can also be time-consuming. While a quarter (25.9%) of filers say they spent or plan to spend less than an hour on taxes, most people spent longer on their taxes. The most common amount of time people spend on their taxes is one to two hours, with 37.1% saying this is how long the process takes them.
But some people are spending much longer. Nineteen percent spend three to four hours on their taxes. Another 18% spend four or more hours on their taxes, with 5.8% saying that preparing and submitting their tax returns takes “too many hours to count.”
So what exactly about preparing taxes takes people so long? Most people (54.3%) say that simply collecting all their necessary documents is the most time-consuming part of the process. Listing and claiming tax deductions is the part that takes the longest for 18.7% of tax filers, while 16.0% say completing their 1040 and other tax forms is the most time-consuming step of filing taxes.
Half of taxpayers expect to get a similar or smaller refund this year
Overall, half of all taxpayers (51.5%) say that they either received or expect to receive a tax refund that’s about the same as (25.0%) or smaller (26.5%) than last year’s refund.
This could reflect early reports from the IRS that the average tax refund amount was down by more than $500, compared to what filers received at that same time in 2018.
The most updated numbers from the IRS, however, show that the situation isn’t so bad. While the number of tax refunds issued is down 3% compared to the same time a year ago, the average refund amount is about the same, at $2,957 in 2019 compared to $2,960 in 2018.
Lastly, around 18.9% of people actually expect to receive a larger refund this year. Another 12% say they're not sure how this year's refund will compare to last year's.
Most people are using their tax refunds to save or pay down debt
When considering how to use their tax refunds, people are most likely to save it (29.9%) or put it toward paying down debt (28.3%).
After these two popular options, here are the main ways people plan to use a tax refund:
- Invest: 5.5%
- Shop: 5.0%
- Vacation: 4.7%
- Make a major purchase: 2.4%
- Donate: 1.3%
Keep in mind not everyone will get a refund this year — one in five (20.1%) say they don’t expect a tax refund.
Household items and food are the most popular categories for tax refund shopping
While many people have earmarked most of their tax refund for savings or paying off debt, it can still give them a little extra room in their budgets for shopping or spending. We asked people what they plan to use their tax refund to shop for this year (with the option to select as many as they plan to spend on).
Of the categories we asked about, people were most likely to use tax refund money to shop for household items, including furnishings or decor (32.5%). This was followed closely in popularity by spending on food, drink, or dining out (31.0%).
Other popular categories for shopping with a tax refund include:
- Clothes - 24.0%
- Car or auto purchases - 22.5%
- Electronics - 16.2%
- Entertainment including video games, movies, or books - 15.7%
- Personal care, grooming, or beauty products - 14.0%
If you’re planning to use your tax refund to make a major purchase, treat yourself to a night out, or indulge in some retail therapy — it will still pay to spend smarter. Decide how much of your tax refund you can spend without setting back bigger goals such as saving or paying down debt, and stick to that budget. You can also stretch these funds a lot farther if you find a good deal, so make sure you check CouponFollow’s deals, coupons, and discounts before you shop or spend.
Half of taxpayers don’t know what the Trump tax reform is, or how it impacts them
A lot of the uncertainty around and change to taxpayers’ refunds can be attributed to the tax code changes that took effect after Tax Cuts and Jobs Act was passed in early 2018.
Nearly half of taxpayers, 44.5%, either don’t know what this tax reform is (20.7%) or don’t understand how it could affect their own finances (28.3%).
The other half of taxpayers (51.08%) say they’re aware of the tax reform that was pushed through with help from President Donald Trump’s administration. Of people who are familiar with this new tax law, about two-thirds are not in favor of it.
When it comes to voting on tax policies, more people feel informed than don’t. Forty-three percent say they have the information to vote in line with tax policies that benefit them. Others, 26.6%, say they “don’t really know how my vote will affect my tax situation.” Then there are 30.4% of respondents who say that they don’t base voting decisions on tax policies.
More than half of people say their tax knowledge is lacking, and almost everyone agrees tax filing should be learned in high school
Some people also feel fairly confident about their tax knowledge. When asked if they feel they know enough about taxes and how they affect their finances, the most common response chosen is “I know enough,” at 41.1%. Another 1.9% classify themselves as tax experts.
But more than half of respondents, 56.6%, feel their tax knowledge is lacking. Nearly a quarter (23.8%) responded with, “I have no idea, I just trust my tax software or tax preparer.” Another third, 32.8%, say they know a little but wish they knew more.
Even so, the vast majority of people agree that knowing how to file taxes is an important skill to teach young people. Ninety-four percent (94%) think high school students should learn how to file taxes (just 6.0% of respondents disagree).
Learning more about preparing taxes can help you better manage or even lower your tax liability. It can also give you enough knowledge to prepare taxes on your own.
Still, it’s clear that 2019 has been a tricky year for taxpayers navigating the process of completing and filing tax returns. If you need a little extra help from a tax professional or software to prepare your tax return, shop around to compare costs and seek discounts. With lower costs, you can keep more of your tax refund, rather than spending.
Methodology: This survey was conducted on March 18, 2019 through SurveyMonkey, which collected 1,069 total responses.