AP poll: More people to use refund for bills

More than a third of taxpayers are using their refunds to pay bills.

WASHINGTON (AP) — That nice annual tax refund from Uncle Sam isn’t a luxury anymore for growing numbers of people. Instead, it’s increasingly going right out the door to pay bills.

In the latest illustration of how the economic slowdown is hitting home, more than a third, or 35 percent, said they are using the money to pay utility, credit card or other bills, an Associated Press-AOL Money Finance poll showed Thursday. A year ago, 27 percent said they were using it that way.

About a third said they are saving or investing the money, down slightly from last year. Nearly a quarter said they are using their refund to pay debt from credit cards and other loans — essentially the same as the one in five who said so a year ago.

Among those using their Internal Revenue Service check for necessities is Ricky Martinez, an unemployed construction worker from Waco, Texas. He said his refund was about $600, far smaller than last year’s, and he has already used it to pay rent and other bills in advance because of his uncertain job prospects.

“It’s just been hard for me to find a job,” Martinez, 29, said in a follow-up interview. In past years when his IRS refund was larger, he saved it in hopes of buying a house, he said.

That’s not to say some people aren’t enjoying their checks. One in five is spending it — an increase from last year — on everything from everyday needs to shopping sprees and vacations.

“We’re using it to pay off bills and to travel, one of our top priorities,” said Daryle Lynn Cornelison, 61, a retired school administrator from Laguna Beach, Calif.

The average tax refund so far this year has been $2,464, up slightly from a year ago, according to the IRS.

Separately, the government will soon begin sending special tax rebates to millions of Americans in hopes they will spend the money and spur economic growth. Those checks will be up to $600 per person and are on top of the refunds.

In the poll, 56 percent said they have received or expect a refund this year, a significant drop from 66 percent a year ago.

There have been no tax law changes that would reduce the number of people getting refunds. Analysts could point to no specific reason for the lowered expectations, other than suggesting it might reflect the general gloom the public feels about anything related to the listless economy.

According to IRS figures, refunds have been sent to 80 percent of those who filed returns through March 29, down from 85 percent of those who filed during the same period last year. David R. Williams, IRS director of electronic tax administration, said in the end the proportion getting refunds this year should be the same as last year.