It's no secret that mothers, and women more broadly, have borne the brunt of much of the societal upheaval during the pandemic. Unemployment during the pandemic has been disproportionately higher for women than it has been for men, and women's participation rate in the labor force is at a 33-year low, according to the National Women's Law Center.
Now, new survey data offers a glimpse at some of the broader effects of the "she-cession." More than half of women in the U.S. say that this year's tax refunds will be very important for their overall financial well-being, according to a survey from CreditCards.com. That's up 25% from a year ago.
It's also notably higher than it is for men, of whom only about a third said their 2021 tax refund will be very important for their financial well-being.
The striking gender differences are likely products of systemic inequalities between women and men that have been exacerbated by the pandemic, says Ted Rossman, an industry analyst at CreditCards.com.
"Even before the pandemic, women were considerably more likely than men to say that a tax refund was very important to their finances," Rossman explains. "Last year it was 39% of women and 26% of men who said these tax refunds were very important. This year it's 51% of women and 35% of men."
The overall percentages have gone up for both groups, but they've stayed at a somewhat similar proportion to one another, Rossman notes.
"It's maybe more of an acceleration of some existing trends rather than something that's fully new," Rossman says. "The gender wage gap, for example, is something that's been exacerbated by the pandemic but was true even beforehand."
The agency has a backlog of nearly 7 million tax returns to process as it issues stimulus checks and updates the tax code to reflect recent stimulus packages, The Washington Post reports, and that has delayed some filers' refunds.
So if you're relying on your tax refund to fill some income gaps this year, it's important you file as soon as possible.
"The sooner you file, the sooner you'll be eligible to receive your refund," Jeffrey Levine, chief planning officer at Buckingham Wealth Partners in Garden City, New York, told Grow recently. "That's money in your pocket sooner rather than later."
A notable exception: If you collected unemployment benefits last year, experts say it's best to wait a bit longer to file your return. The recent Covid-19 relief package retroactively changed the tax rules to waive the federal tax on $10,200 in benefits for 2020, and the IRS and tax software providers are working to accommodate that provision.
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You can start by checking out the IRS tool that determines your eligibility for the agency's Free File program. Eligibility is based on your income, as well as factors including your age and state of residence. It also tends to focus on people with straightforward returns, meaning they have W-2 income, limited investment income, and are claiming the standard deduction.
While Free File focuses on your federal return, the software may also set you up with low-cost (or even no cost) ways to submit your state returns. That may be especially important to consider this year. If you crossed state lines for extended periods in 2020, you'll likely have to submit tax returns for each of those places.
If you don't qualify for Free File, there are other options you might explore for free tax prep, including volunteer assistance programs, and free versions of tax prep software.
Did the IRS already send you the money they owed you from your return? Between the two recent rounds of Covid stimulus checks and your refund, you may have a something of a windfall.
"Your typical family of four might be bringing in $10,000 this quarter, between the January stimulus, the March stimulus, and the typical tax refund," Rossman says. "A lot of people are using things like stimulus and tax refunds to either boost their savings or pay down debt."
Here are a few tips for making the most of your refund.
- If there's an expense you've been meaning to take care of, but money has always gotten in the way, tackle that first, says Susan Bradley, a certified financial planner and the founder of Sudden Money Institute. This could include paying rent, she adds: "That's a legitimate use."
- Then, if you're caught up on immediate expenses, "look at what's been put off," Bradley says. "Is it paying down a credit card? Is it fixing the car? Is it a medical procedure? So many people put off things they can kind of live without, but if you do that for too long it has some pretty negative consequences."
- Once those financial basics are covered, you can focus on building wealth, says Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors. "If you took $1,400 and you compounded it to retirement, that's going to be a sizable chunk of money," La Spisa says.
This story was updated to clarify tax filing recommendations for individuals who collected unemployment benefits in 2020.
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