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By Christine Benz and Aron Szapiro | 01-27-2016 02:00 PM

Why No Refund Is Better for Taxpayers

By correcting excessive withholding, taxpayers may be able to avoid credit card debt and refund splurging, and allocate more to retirement accounts throughout the year, says HelloWallet's Aron Szapiro.

Note: This video is part of Morningstar's February 2016 Tax Relief Week special report.

Christine Benz: Hi, I'm Christine Benz for A large percentage of taxpayers receive refunds on their tax returns. Joining me to discuss where that money goes is Aron Szapiro--he is a policy and finance expert with HelloWallet, which is part of Morningstar.

Aron, thank you so much for being here.

Aron Szapiro: Thanks so much for having me.

Benz: Aron, let's discuss just the numbers when you look at 2015--the percentage of taxpayers who got a refund on their tax return and also what those refunds tended to look like in terms of dollar amounts.

Szapiro: So, about four in five taxpayers get a refund, and the average refund is a little bit more than $3,000. So, we are talking about a lot of people getting a pretty good chunk of change every spring when they file their taxes.

Benz: HelloWallet took a look at what people who received refunds did with that money. Let's talk about how you are able to get your hands on some data that indicates what people did with the money that they received.

Szapiro: So, our users put it in their financial accounts--credit cards, checking accounts, this kind of thing. And when they used our budgeting tools--anonymously, of course--we are able to look at our users and how they spend their money. Tax refunds have a unique identifier, so we can identify when somebody gets their tax refund from the IRS, and then we can look at how they spent their money in the months leading up to the tax refund and the months afterward.

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