It’s the most wonderful time of the year. No, not the holidays–tax return season. And as Americans across the country await that direct deposit, or pull out the checkbook for the IRS, CivicScience dove into the data to better understand what taxpayers are experiencing this year. 

Currently, 51% of U.S. adults report they received a tax refund, while 33% will be paying a tax bill. Just 16% aren’t quite sure yet. The new figures mean that more Americans owe in 2022 than 2021.

As further data show, 47% say their situation was what they expected–whether that was receiving money or paying money. However, 22% say they unexpectedly owe money or more money than they anticipated, a figure that has increased four percentage points since last year. 

It’s worth noting several demographic correlations here. Younger people and those still living with Mom and Dad (who we might generally assume to be younger) were more likely to report they got less back than they expected. Meanwhile, adults aged 55-64 and those who are homeowners were more likely to report they owed more than expected. 

Some of this could have to do with parental status, as parents are more likely than non-parents to be unexpectedly owing money this year, or at least more than they expected to. This could potentially be due to paying back excess child tax credits.

Further data illustrates that newer parents (those with children age 0-2) are more likely to have unexpected tax filing results.

This year, surprise over tax returns is not bound by socioeconomic standing. In terms of finances, those who make the most and have not had their financial situation impacted by the pandemic are more likely to unexpectedly owe or owe more than they anticipated. On the other hand, those who make the least and are financially worse off as a result of the pandemic are more likely to have received less money back than they expected. 

Also worth nothing that those in the most favorable financial situation are the most likely to not have anything unexpected come up this tax season, furthering the notion that the more advantaged one is financially, the less likely they are to have their lives negatively impacted by tax season.

Investing and Paying Off Debt Still a Priority

For those who will receive a tax return this year, the first question is how to handle it? As the data show, the majority of people plan to pay off debt or put their tax return money aside (28% and 27% in both cases). Though we’ve seen a YOY rise in travel and shopping plans for tax refunds prior to filing, putting money away or getting in the green again is still the priority among those who have received their refunds, and the figure is just in line with last year’s. 

When it comes to investing refunds, young adults aged 18-34 are the most likely to plan to do so. Paying off debt and putting it aside are the most popular option among those aged 35-54. Saving is also big among the retirement- age segment (65+).

However, a look at income level shows that the highest income earners and those who are financially better off than they were before the pandemic are the most likely to invest, put it aside or travel (likely because they simply have more disposable money to do all of these activities with). Middle income earners are focused on paying off debt, and low income earners are the most likely to go shopping. 

All of this potentially speaks to an unspoken money mindset, wherein those who earn more may have access to a better understanding of how to leverage their money in their favor, while those who earn less may be seeking shorter term rewards. 

Generally speaking, tax return season 2022 is largely about leveraging money–whether through investing it or getting out of debt. And while this is consistent with what we’ve seen in recent years, what’s new and noteworthy is the rise in unexpected tax bills. With many Americans paying more than anticipated, it seems that having money put to the side could continue to be useful for future tax seasons as well.