What Do You Do With Your Tax Return?

First Command Financial Services has recently published the Tax Refund survey (it’s a Powerpoint that you’ll have to download, sorry) that investigates how people spend their income tax return money, and breaks that spending down between military and civilian populations.  It is a sort-of long study, but several really interesting things jumped out at me:

19%  will use their tax refund to pay monthly bills

Whoa!  That is concerning.  This number is up from 16% in 2013, and 14% in 2012.  The report breaks down this bill spending even further, and then it gets even more concerning:

  • 65% of those using their tax refund to pay monthly bills have been doing this for three or more years, and
  • 39% of those using their tax refund to pay monthly bills will be using this money to pay their housing costs.

Folks, I think we have a problem here.  A little math using these figures shows that nearly 8 percent of military respondents plan to use their income tax return money to pay their rent or mortgage.  I have to assume that they’re paying their rent or mortgage because they don’t have the money to pay their rent or mortgage otherwise.  These are people who are getting a housing allowance from the military to pay their housing expenses.  What in the heck does this mean?

I can’t wait to hear your thoughts on this.

The rest of the report is really interesting, too.  Just keep in mind that it was sponsored by a company that makes a profit by providing financial services to military service members.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • guest

    It means people are living outside their means. BAH for us has always covered our housing, and utilities/insurance. Sounds like some of them wanted the nicer house, in the nicer area, or had way too many kids (and therefore need more space) then their rank would support.

    For us we put 1k into our rental house repair fund, the rest went into a vanguard taxable account as we maxed out our roths for the year with a bonus I got at work in January.