As Americans turn a watchful eye to the calendar on the wall, a haunting date approaches. April 15, 2013, is the last day to file those 2012 federal income taxes, leaving many to wonder what to do with the inevitable refund that will be coming from this endeavor. In 2013, though, inevitable might not be the correct term to use, as many Americans believe that their little pot of gold at the end of the tax rainbow will be disappearing this spring.
Why are Americans feeling as though they will be getting little or no refund? Well, the answer will come as a shock to many, but it is due to an economy that looks to be on the rebound. For millions of Americans out of work and defaulting on mortgages, this one is hard to believe, but the results of a survey done by American Express say otherwise.
The results, which are found in a CNN piece, show some interesting results. Last year, 64 percent of the 1,500 people surveyed anticipated getting a refund. This time around, that number dropped to 59 percent. President Obama has also made it a point, since his re-election, to note that he wants folks in the higher income brackets to pay their fair share of taxes. Well, 30 percent of families with household incomes over $100,000 in the survey believe that they will owe Uncle Sam, which is a change from the past few years.
It is not just the $100,000-plus group that feels it is about to get pinched. Last tax season, this same survey found that only 13 percent of those asked thought they would owe money. Fast-forward to the 2013 edition, and that number is up to 19 percent. A swing of 6 percent does not seem like much, but for the families having to pay, it can be an expense that is hard to come up with in lean times.
In that regard, the survey mentions that 15 percent of citizens who owe will turn to their credit card to pay off the debt. That number was 7 percent last year and points out an ever growing problem. Foreclosures and long-term debt are what gets most people in trouble. By using credit cards to payoff the IRS, taxpayers are simply trading one master for another, so to speak. Eventually, that credit card bill has to be paid off. This is fine if, like the story states, people are making more in their paychecks to cover it. However, for those on the edge with their bills, this solution could be pushing them one step closer to financial disaster.
For those still getting refunds, it could be a welcome helper. That is because another side effect of all the political infighting was the expiration of the payroll tax grace period, which means that the paychecks coming home, contrary to the survey results, will actually be lower. It is certainly a catch-22 for the American public, who is feeling they are about to get pinched by a “recovering economy.