They may have grown up with an always plugged-in and mobile world, but Millennials are actually more likely to turn to paper than any other age group, a new survey shows.
Surprisingly, millennials — taxpayers in the 18- to 34-year-old age group — report a higher rate of mailing paper returns (17% versus 8% among taxpayers ages 35 and older), according to an online survey commissioned by NerdWallet and conducted by Harris Poll of more than 1,600 U.S. adults who filed taxes last year and plan to file taxes this year.
The results may reflect the trend that Millennials are less likely to have a traditional computer than other Americans, relying instead on mobile devices. Add to this the limited number of mobile platform tax preparation systems, and a fear of taxes, and the young group is turning to a more old fashioned format.
The survey finds millennial taxpayers worry about preparing their taxes — 80% report concerns such as making a mistake, not getting a full refund or paying too much (compared with 60% of adults ages 55 and older), among others. About a third (34%) of millennial taxpayers turn to friends or family with questions instead of tax professionals (27%) or online sources (20%).
“Who knew so many millennials would be so old-fashioned?” says Liz Weston, NerdWallet columnist and personal finance expert. “But in some ways, it makes sense: Millennials tend to have less experience with a deeply confusing tax code, less cash to seek professional help and less need for the more complicated returns that having children or a mortgage can bring.”
Plans for refunds
Our survey found that millennials and older age groups all agree in one area. The number of American taxpayers who believe they should save or invest their refund this year has increased compared with the number who actually did so last year. About 4 in 10 taxpayers who received a refund last year say they saved or invested the cash; however 54% who expect to get a refund this year believe they should invest or save the windfall.
Americans who can afford professional advice during tax season can flirt with danger when hiring a tax preparer. Just under half (49%) of taxpayers who hired a tax professional to do their taxes last year didn’t ask some very basic questions — such as about certification — of their tax preparer.
“Only four states have regulations for tax preparers,” Weston says.
“As the Pew Charitable Trust points out, ‘independent preparers are less regulated than hair stylists,’ a profession that requires licenses nationwide,” she says. “So in this buyer-beware environment, consumers need to ask the right questions.”
Millennials: Uncertain and old-fashioned?
The survey finds that the most popular method of filing taxes last year across all ages groups was tax software programs like TurboTax, TaxAct or H&R Block: 36% of millennial taxpayers used this method, compared with a 35% average for all age groups.
But millennial taxpayers were more likely than any other age group to file a paper return: 17% of younger taxpayers tucked their returns in the mail, compared with 8% among taxpayers ages 35 and older.
- Thirty-four percent of millennial taxpayers say they ask tax-related questions of friends or family — instead of a tax professional (27%), online sources (20%) or the IRS (9%) — a rate nearly twice as high as the national average of 19%. Nationally, 38% of taxpayers turn to a tax professional, followed by friends and family and online sources at 19% each, and 10% contact the IRS with tax-related questions.
- Millennial taxpayers were much less likely than the average to hire a tax professional (17% versus the national average of 29%).
- Fears surrounding tax preparation are common across all age groups: Nearly 7 in 10 taxpayers (69%) have a concern about tax preparation. The top concern is making a mistake (17%), followed closely by paying too much in taxes (15%), not getting the biggest possible refund (14%) and getting audited (11%).
- Millennials are more worried about taxes than other age groups: Four of five (80%) millennial taxpayers report fears related to tax preparation — such as making a mistake (22%), not getting the biggest possible refund (17%) or paying too much in taxes (13%).
- Among those who received a refund last year, 1 in 5 millennial men (19%) say they aren’t confident that they got the maximum refund possible, compared with just 5% of men ages 45 and older who aren’t confident.
“Millennials have the most concerns about taxes, but unless their friends and family are accountants, turning to loved ones for tax advice is the least-reliable source for accurate, up-to-date information,” Weston says.
Refund: Save, splurge or invest?
As a group, more taxpayers say they will save or invest their refunds this year compared with those who did so last year. We asked taxpayers how they spent any refund last year, and what they plan to do this year:
- 41% of those who received a tax refund last year say they invested/saved it; however, 54% of those who expect a tax refund this year believe they should invest/save it.
- 50% of those who expect a tax refund this year say they should save it, compared with 37% of those who received a refund last year and saved it.
- 7% of those who expect to get a tax refund say they should invest their refund in the stock market, compared with 5% who did this when they received a refund last year.
- Yet among those who expect a refund, more people than last year say they should spend it — 34% want to spend it on a vacation, home improvements or splurging at the store, compared with 31% who received a refund last year and say they spent it.