More that 65 percent of taxpayers surveyed by H&R Block on March 1st are planning to use their rebates to pay bills or buy necessities like food. Respondents to the online survey were also asked how they planned to spend their tax refunds, and their answers showed nearly the same priorities.
Forty five percent of taxpayers surveyed said they would use both the rebate and the refund to pay bills; 21 percent said they would use the rebate for necessities while 17 percent said they would use their refunds for necessities. Other priorities were savings or investment â 18 percent planned to use the rebate this way, 15 percent the refund. Only 16 percent said they would use the rebate for a special purchase or a vacation; 7 percent would use their refunds for special purchases.
These results were surprising to many, according to Nancy Mays, H&R Block spokesperson. The aim of the economic stimulus package was to put money in the hands of consumers who would then use it to boost the U.S. economy.
In the past, taxpayers have spent half to two-thirds of the rebate checks, said Jared Bernstein, an Economic Policy senior economist, according to CNNMoney, but conditions are different now. "We've never done this is a period when American households are so deeply indebted," he said.
Mark Zandi, chief economist at Moodys.com says that what taxpayers say and what they do may be two different things, CNNMoney reports. Zandi thinks that Americans will end up spending two-thirds of their rebate checks, providing an economic stimulus of $70 billion.
The H&R Block survey also revealed uncertainty among Americans about the rebate program. One third did not know whether or not they qualified for the rebate; and 75 percent did not know how it would affect their 2008 tax returns.
"The rebate is an advance credit that taxpayers will receive in 2008 as long as they file a return and meet eligibility standards," said Tim Gokey, H&R Block's president of Tax Services. "If you're due a higher payment, you'll get the remainder next year when you file your taxes. The good news, however, is that if you received a higher rebate than you should, you do not have to pay it back."
The 1001 respondents to the H&R Block survey are aged 18 years and older and were selected to represent demographic groups as shown in U.S. census data by age, gender, geography and other census categories, Mays said. H&R Block surveys taxpayers annually, asking respondents about hot topics. One hoped-for outcome of the surveys, Mays said, is information that may help H&R Block serve its clients better.