[Tax Season] 35% of Americans Who Owe Can't Afford Their Tax Bill

FinanceBuzz surveyed 1,000 people to find out how they plan to file their taxes, whether they expect to owe money or receive a refund, and more.

tax preparation
Updated May 13, 2024
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The end of January officially started the 2024 tax season. This year, the IRS is piloting a new free filing software, Direct File, to help Americans submit their tax documents correctly and affordably. However, even with this helpful new option, tax season can be daunting for many.

To understand how Americans feel about their taxes this year, FinanceBuzz surveyed 1,000 U.S. adults. We asked them when they plan to file taxes this year, how they will prepare them, and more.

In this article

Key findings

  • 54% of tax filers plan to submit their taxes in the first five weeks they are eligible to do so.
  • The average amount Americans anticipate spending to prepare and file their taxes is $216.
  • 83% of Americans feel confident they accurately represent their income on their taxes.
  • 30% of people are unsure they’re taking all the tax deductions they’re eligible for.

How are Americans tackling their taxes?

The IRS typically begins accepting tax returns sometime in January, with a mid-April deadline familiar to most taxpayers. That gives tax filers a four-month window to gather all relevant information and paperwork, compile it, and send their tax documents for review and approval. So when do most people get their taxes done?

tax survey graphic

Nearly half of all people, 46%, say they will file their taxes by the end of February. Excluding people who say they do not plan to file taxes at all, that number jumps to 54%.

That means that most people who plan to file taxes this year will get their forms submitted in the first five weeks they are eligible to do so. Just 15% of people say they are waiting until the final two weeks before the April filing deadline.

tax survey graphic

The most popular option by far is for a tax filer to prepare their taxes themselves using an app or software that they pay to use. 42% of taxpayers plan to use these kinds of services, which guide users to the information they need to submit in different parts of their tax return documents. These services typically check each return for accuracy before submitting them.

One out of every four tax filers plan to pay a tax professional to do their taxes for them, the second most common response. The only other option that more than 10% of people opt for is software that allows them to file their taxes for free, which 13% of people plan to utilize. Typically, users must meet certain eligibility requirements for free access to these services.

How much should people budget for filing services?

As mentioned, not everyone will meet the eligibility requirements to use completely free software to file their taxes, meaning those who don’t meet those standards (or use another free option, such as filing their taxes by hand) must pay to file.

tax survey graphic

On average, people say they plan to spend $216 to file their taxes this year, with just 18% saying they don’t plan to spend any money. More than a fifth of people, 21%, plan to spend between $1-$50 on their taxes, while a little more than a quarter plan to spend between $51-$100.

All told, around two-thirds of tax filers (65%) plan to spend $100 or less to file their taxes. Not everyone expects their costs to be so reasonable, however, as more than a quarter of people (26%) plan to spend more than $250 filing their taxes.

How confident do filers feel about preparing their taxes this season?

Taxes can be very complex, which is why so many people turn to experts and software designed by experts to help them navigate the nuances of their tax returns.

tax survey graphic

When it comes to major tax information, people are most secure in their ability to accurately represent and report their income, something that 83% of tax filers say they are confident they are doing.

People are least confident about knowing whether they have taken all the deductions they are eligible for, with just 70% expressing confidence that they have covered that aspect of their taxes correctly. That means three in 10 tax filers are not confident they are taking all the deductions they legally can.

How many people are expecting tax refunds this year?

While filing taxes can be a daunting and complicated process, it can also be rewarding for taxpayers who receive a refund from the government. So, how many people does that include?

tax survey graphic

55% of respondents say they expect to receive a tax refund this year. That number may be a little pessimistic, as 64% of people received refunds last year after filing their taxes. Around a third of people, 31%, expect to come out even on their taxes, and just 15% think they will owe the government additional money.

A pie chart showing how many people anticipate being able to afford their anticipated tax bill. 65% say yes.


Not everyone who has to pay more to the government can afford to pay their tax bill, even if they know it’s coming. Among filers who say they expect to owe money this year, more than one-third, 35%, say that they do not have enough money in their bank account to cover the anticipated bill.

What people would use tax refunds on

Since most people tend to receive tax refunds, we wanted to know the top ways people would spend a hypothetical refund of $1,000 if they were to receive it this year.

tax survey graphic

56% of people said they would save or invest the money, the only option chosen by more than half of the respondents. More than a third of people said they would pay down debt (37%) or catch up on bills (36%). Just 11% of people said they would use some or all of the money to treat themselves to something like a vacation or a major purchase.

How do filers feel about the amount of federal taxes they pay?

Finally, we wanted to see how people feel about the amount they pay in taxes each year, specifically the amount they pay to the federal government.

tax survey graphic

More than half of people, 55%, feel that they currently pay too much in federal taxes. A little more than one out of every three people, 35%, feel they pay the right amount, and one in 10 feel that they should be paying more in taxes.

Taxes play an important role in shaping the political identities of many people. With a presidential election on the horizon, we wanted to examine how people of different political affiliations answered this question.

A chart showing how people from the top two political parties, plus Independents, feel about the amount of federal taxes they pay.


Unsurprisingly, those identifying as Republicans are more likely to say they pay too much in taxes, with two-thirds of Republicans (66%) saying as much. On the other end of the spectrum, less than half of Democrats (45%) say they pay too much in taxes, while 56% of Independent voters feel they pay too much in taxes, putting them in the middle ground between the more polarized respondents.

Interestingly, the percentage of people who feel they do not pay enough in taxes was a consistent 10%, regardless of political leaning.

Tax advice from our experts

Tax filing season is a yearly occurrence that can have serious consequences if not completed correctly and on time. No one should feel as though they’re going in blind. That’s why the FinanceBuzz team reached out to different subject-matter experts to help give their insights to help filers feel more prepared.

Some responses may have been slightly edited for clarity and brevity. The information below is for general informational purposes only and is not legal advice.

Questions we asked:

  • When is the new IRS Direct File service advantageous to use? Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?
  • What are the potential risks of falling behind on paying taxes owed?
  • What are some deductions you believe many filers overlook? Are there any uncommon ones filers should look into this year that they may not have thought of?
Assaf Harpaz, S.J.D, LL.M, LL.B

Visiting Assistant Professor
Drexel University
Thomas R. Kline School of Law

When is the new IRS Direct File service advantageous to use? Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?

IRS Direct File is a pilot program where eligible taxpayers can electronically file 2023 federal tax returns directly with the IRS for free. The pilot program is currently available in 12 states to taxpayers who meet certain eligibility criteria (e.g., those who do not itemize their deductions). For the full description and eligibility criteria, see the IRS website.

For eligible taxpayers who have relatively simple federal income tax returns, using Direct File can be a free and easy way to file their federal taxes. In general, taxpayers with more complex returns, such who have business income or who itemize their deductions, often utilize the services of a paid accountant or software.

What are the potential risks of falling behind on paying taxes owed?

It is very important to file taxes on time, and there can be negative consequences to falling behind on your taxes. Some of these consequences can include interest build-up, penalties, seizing of money and assets, and travel restrictions. Again, it is best to file taxes on time and to seek professional advice from a qualified tax professional for any relevant questions.

What are some deductions you believe many filers overlook? Any uncommon ones filers should look into this year that they may not have thought of?

One frequently overlooked deduction is the itemized deduction for State and Local Taxes. From 2018-2025, the Tax Cuts and Jobs Act limits this deduction to $10,000. Among the deductible taxes, taxpayers can elect between deducting state and local income taxes or state and local general sales taxes (which include retail sales taxes). Electing the latter can be more appealing for residents of states that levy no state income tax, like Florida and Texas.

Caroline Chen, J.D., LL.M

Associate Professor
Accounting and Finance Dept
San Jose State University

Which Americans would benefit from filing through the IRS Free File service?

The Free File program is only available to taxpayers with an adjusted gross income (AGI) of $79,000 or less. The service is self-limiting due to this limitation. You can find more information on the IRS website.

Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?

Every American’s tax situation may be different, and each has varying levels of abilities to be able to prepare their own taxes.

What are the potential risks of falling behind on paying taxes owed?

The failure to pay your tax owed after computing it on your annual federal income tax return will be assessed a Failure to Pay penalty, which is 0.5% of the amount owed and not paid per month, up to 25% total. Moreover, you will also be assessed interest on the amount owed and not paid per month based on the Treasury’s quarterly interest rates.

What are some of the most underused deductions? Any uncommon ones filers should look into this year that they may not have thought of?

If you have a qualified deduction, then you are allowed to use it, generally on Schedule A (Itemized Deductions) for Form 1040. If a taxpayer does not itemize their deductions, then they would use the Standard Deduction based on filing status.

Professor Ann M. Murphy, J.D., M.A

Professor of Law
Gonzaga University School of Law

When is the IRS Direct File service advantageous to use?

The new IRS DirectFile is a pilot program starting in 2024 (for 2023 taxes). It is being rolled out only for certain states (every state was invited to participate, but the IRS was only able to accommodate 12 states in 2024). The program is free, and tax returns are filed directly with the IRS. There is no need to mail in a return or use a company to e-file.

Those earning only wages and salaries (as opposed to investment and business income) would most benefit from the program. Due to our mandated reporting system, the IRS already has total income figures for all wage earners. Businesses must report all wages and salaries paid to employees to the IRS. The IRS also has individual information on interest earned on bank accounts and other investments, as well as social security payments and unemployment payments. All that income is added up to reach the total income amount. Then come the subtractions.

Approximately 90% of Americans take the standard deduction (as opposed to the 10% who itemize their deductions). The tax code also has credits that are subtractions from the tax owed. The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are two of the larger ones available to qualified individuals.

Under the pilot program, those taxpayers qualifying for the EITC and CTC may use the free DirectFile program to apply deductions and credits to reach the amount of tax due. The program takes you step by step. In addition, the IRS will have individuals available to answer questions as you complete the program online. You may use a computer, a tablet, or even a smartphone. The information on taxpayers who can take advantage of the program is available on the IRS website.

Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?

When other types of income are involved, such as when a person has their own business or gains or losses from the sale of capital assets (capital gains and losses), the IRS DirectFile program cannot yet accommodate a free filing program for those items. If a person chooses to itemize their deductions (those are deductions for charitable contributions, medical expenses, mortgage interest, and other expenses), the program is unable to assist taxpayers with those items. I expect if the pilot is successful, the IRS will be able to add more items to the free file program. The DirectFile program is also available only for federal taxes, not state taxes (if an individual’s state taxes income).

A credit is available for certain businesses run by individuals, and a tax preparer or a commercial tax software program may be more helpful. Commercial tax preparation software is still free for those with low incomes. Those eight companies are listed on the IRS website. Two companies previously offered free file for low-income taxpayers (H&R; Block and TurboTax) but withdrew from the IRS partnership.

Beware of certain companies that advertise free tax preparation and filing. Many times, those companies later inform the user that the return preparation is not, in fact, free. Once a person has input much of their information, they simply consent to pay the cost because they have gone so far into the program and would rather not begin all over with another service.

What are the potential risks of falling behind on paying taxes owed?

It is important to file a return on time, even if a person is unable to pay the taxes in full. There are penalties for failure to file a return on time. There are, of course, also penalties for failure to pay the tax, but at least a person will not have to pay both a failure to file and a failure to pay penalty.

My biggest piece of advice is not to ignore IRS notices. It is human nature to engage in avoidance behavior sometimes, but the IRS does not go away. Penalties will build, and interest will be due on the amount that should have been paid. There are numerous payment options. See the IRS website for more details.

The IRS will collaborate with you to produce a payment plan or might accept an offer for less tax than due if you cannot pay the tax you owe. Beware of companies that advertise that with their help, you can “pay pennies on the dollar.” These are for-profit companies, and they will charge a fee. You may work out arrangements with the IRS without the assistance of a third Party.

What are some of the most underused deductions? Any uncommon ones filers should look into this year that they may not have thought of?

Oddly enough, some people who do not file returns are actually due a refund. If a person is a wage earner, they have already paid tax into the system through withholding. If their withholding is set too high, they are owed a refund from the IRS. This includes some taxpayers who are not required to file returns. A single person who is under the age of sixty-five who makes less than $13,850 is not required to file a federal tax return. However, they may wish to do so in case they have overpaid tax through withholding. If this person is a student, they may be able to claim a credit against tax due by claiming an education tax credit. Information on those credits is available from the IRS.

Due to the complexity of our tax system, it is my experience that many taxpayers believe they are not getting the benefit of unknown tax deductions and credits. Often, this is not the case. On the other hand, there are a multitude of deductions and credits. There are approximately 180 exemptions, deductions, and credits in the U.S. tax code. The vast majority of those apply to very few individuals or businesses.

I frequently advise my students to check for education credits, as those may save them a great deal of tax. This is true even if they were not required to file a tax return at all. The Earned Income Tax Credit is available to certain low-income individuals. In addition, there is both the Child Tax Credit and the Child and Dependent Care Credit. One is for taxpayers who have a child, and the other is an additional credit for individuals who are paying childcare expenses, so they may be gainfully employed. There is a relatively new 20% deduction for “qualified business income” for certain individuals who own their own businesses.

Nicholas Robinson, J.D., LL.M.

Director of Accountancy
MBA Coordinator
MBA Eastern Illinois University

When is the new IRS Direct File service advantageous to use? Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?

The main, likely sole, advantage of the IRS Direct File service will be that it is free. While the system is not fully functional nor universally available, I find it highly unlikely that it will be a better system than a paid software service or an accountant. An intriguing feature of the system is direct access to IRS support services. This could be a significant advantage for the system if it works well. It is still too early to see how the rollout proceeds and eventual product functions.

The service does not support taxpayers with business income or itemized deductions, so those would need to use other services. Additionally, the service does not fully integrate with state returns, at least at this time. This would mean those required to file a state return would need to use a different service for that, leaving half of the tax job undone. The simplicity and time savings of using a single service to take care of both the federal and state returns may make the costs associated with a paid service worthwhile.

What are the potential risks of falling behind on paying taxes owed?

If a taxpayer falls behind on their tax payments, the IRS will increase its efforts to collect. One of the more extreme measures the IRS can use is wage garnishment. In rare circumstances where criminal activity is involved, the IRS can seize assets to cover the taxes owed. For most normal people and typical situations, interest can be a big problem. Unpaid taxes will accrue interest, making the amounts owed greater.

What are some deductions you believe many filers overlook? Any uncommon ones filers should look into this year that they may not have thought of?

With the tax law changes in 2017, the elimination of many common deductions, and the significant increase in the standard deduction, there are not many overlooked deductions anymore. One of the more curious ones is state sales tax, though. A taxpayer can deduct from their federal income the greater of sales tax paid or state income tax paid.

This usually only applies to taxpayers who live in very low or zero-income tax states, but if the taxpayer has large purchases in the year, like a new car, it can happen that the sales tax is greater than the income tax, and most taxpayers do not think to do the calculation.

Patrick L. Hopkins, Ph.D., CPA

Assistant Professor, Accounting
Neeley School of Business
Texas Christian University

When is the new IRS Direct File service advantageous to use? Which Americans would benefit from filing through a paid service such as an accountant or paid software instead?

Currently, the IRS Direct File system is only in the pilot stage. However, based on IRS guidance, the system will cater to people who do not itemize or have self-employed or business income. With that said, the average American resident could benefit from this program. Remember that this system is only for filing your federal tax returns. So, if you live in a state with a state income tax, you must meet your state responsibilities.

What are the potential risks of falling behind on paying taxes owed?

Failing to file or pay can create a snowball effect on the amount owed to the government. In other words, your balance owed to the government will grow with time due to the assessment of penalties and interest associated with the balance owed.

What are some deductions you believe many filers overlook? Any uncommon ones filers should look into this year that they may not have thought of?

The average American resident will not be able to itemize deductions this year because their itemized deductions do not exceed their standard deduction (currently, the standard deduction is between $13,850 for single filers and $27,700 for married filers).

With that said, taxpayers unable to itemize can benefit from deductions that bypass the standard deduction, such as student interest paid and out-of-pocket educator expenses. Furthermore, taxpayers should explore their employer’s pre-tax benefit options, such as 401k and 403b retirement plans and medical benefits. Participating in these plans bypasses the standard deduction and immediately reduces one’s taxable income for the year.

Tips for saving this tax season

Tax season doesn’t have to be a pain. Taking a few proactive steps to secure your success will make filing go smoothly this April.

  • Research filing software. Research the best tax software available so you can file with confidence and certainty.
  • Compare tax software. Filing software is not a one-size-fits-all solution. Comparing popular programs like TaxAct vs TurboTax can help you make an informed decision before paying.
  • Make the most of your return. If you’re expecting a return this year, learn how to pay off debt with whatever you get back to get closer to your financial goals.

Methodology

FinanceBuzz surveyed 1,000 U.S. adults, asking about their best practices and sentiments surrounding tax filing.

Easy Tax Relief Benefits

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Author Details

Josh Koebert

Josh Koebert is an experienced content marketer that loves exploring how personal finance overlaps with topics such as sports, food, pop culture, and more. His work has been featured on sites such as CNN, ESPN, Business Insider, and Lifehacker.