When it comes to being financially responsible and educated about complex topics, such as taxes, most people generally believe older adults to be more prudent than younger generations. This is largely because older individuals typically have more experience managing their finances and taxes and therefore may be better equipped to make smarter decisions than more inexperienced youths. However, a new study debunks this generalization and shows that younger adults typically surpass their parents when it comes to making wise tax decisions.
Findings from a behavioral study conducted by account management service Manilla.com demonstrate that young adults are more likely than older age groups to file their taxes early and save their refunds. Approximately 62 percent of respondents from ages 18 to 23 said they file their taxes in January or February, compared to 39 percent of older study participants. In addition, 46 percent of respondents in the younger age group also said they plan on saving their refunds, while only 25 percent of older individuals gave the same response.
The study also examined general behaviors during tax filing season that did not take age into account. For example, the research discovered that March is the most popular time to meet with a tax preparer and submit tax forms, with 39 percent of all respondents saying they wait until this month to start putting returns together. As 65 percent of all respondents cited gathering tax paperwork as the biggest annoyance about filing their returns, an overall 87 percent of filers said that keeping their financial records organized all year greatly helped them prepare to file and made tax season a great deal easier.
Adults of all ages try to use their refunds wisely
Though younger individuals were the most likely group to put their refunds into a savings or retirement account, the research showed that the majority of people from all generations boasted good intentions for their windfall. Forty-two percent said they planned to use their windfall to pay bills or chip away at their credit card debt. A total 23 percent of all survey respondents said saving their refund was their top priority. Only 11 percent of respondents said they would put the money toward a big-ticket purchase or vacation, and 24 percent said they don't expect to receive a refund at all.
Regardless of age, making smart decisions about taxes is important to overall financial health. This includes understanding the importance of financial recordkeeping, making wise investment and retirement decisions to keep liability low and being educated on the different credits and deductions that can benefit filers overall.
For a more in-depth look at Liberty Tax Service®s, visit the Give Me Liberty! Magazine. Follow Liberty Tax® on Facebook and on Twitter or contact Liberty Tax® directly at 1-877-at-Liberty.