The average Gen Z American estimates that they only understand about 44% of the tax filing process, according to new research.
A survey of 2,000 Americans 18-26 looked at how they’re feeling about tax season and found that over half (56%) admit they’re intimidated by the process of filing their taxes.
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%).
Gen Z is even 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, with 50% 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%) even sounds more appealing than the task of filing their taxes.
Still, the deed needs to be done, as 62% acknowledge that it’s better to file taxes early.
Conducted by OnePoll for TurboTax, the survey found that 53% 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%) have their hopes up 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% feel “much more confident” this time around.
Some areas that they need more education in are the process itself, with 30% expressing uncertainty that filing early makes any difference.
And 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 (68%).
Further, one in four feel uneducated about the different ways they can save on their taxes when filing (26%).
Just 38% 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 revealed 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,” said Lisa Greene-Lewis, CPA and tax expert at TurboTax. “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.”
“With the average refund being over $3,000 last year it is important to file as soon as possible so you can get that money back. The IRS will issue most refunds within 21 days or less of acceptance of filers returns if they e-file with direct deposit.”
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% of their refund and investing 23% of it, although 27% 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,” said 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.
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).
