Most Americans plan to save their tax refunds

February 14, 2014: 2:39 AM ET
Biggest tax changes you'll see in 2014
NEW YORK (CNNMoney)

Instead of spending the big tax refunds they're expecting this year, the vast majority of Americans plan to sock the money away.

A high 61% of Americans say they will save or invest their refunds, while 21% plan to pay off debt and another 18% will spend the money on necessities, according to a new TD Ameritrade survey of 1,000 investors. Only 19% of respondents said they expect to make non-essential purchases with their refunds.

For all the grief millennials get, they're actually the ones most likely to save their refund checks -- with more than two-thirds, or 67%, of Generation Y taxpayers ages 25 to 37 saying they plan to save or invest the money.

Related: How to lower your tax bill

Almost half, or 45%, of people surveyed by TD Ameritrade said they are expecting to receive a refund. Last year, the average tax refund was $2,744, according to the IRS.

Millennials are more likely to expect refunds partly because they are more likely to have more taxes withheld from their paychecks throughout the year.

Even though a big refund check can be a nice infusion of cash, it often makes more sense to withhold less and boost the amount you're receiving in your weekly paycheck.

"Rather than giving Uncle Sam extra money throughout the year, they may want to consider adjusting their withholdings so they have that money to invest throughout the year," Lule Demmissie, managing director of investment products at TD Ameritrade said in a statement. "A small increase in the amount you invest monthly can add up over time."

Related: Beijing loses billions as rich skip taxes

The expectation of such big refunds may be why more millennials rushed to file their taxes right away. About 44% of Gen Y respondents said they file their taxes as soon as they get their W-2s, versus only 26% of the remaining respondents.

In general, Americans are diligent about filing their taxes. The majority, or 62%, said they file their taxes before the deadline, even if they don't rush to file right away.

And when asked where they think the government should spend their money, taxpayers cited public education most often, followed by healthcare and job creation.

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