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Look At Your Paycheck: Many Unaware Of Tax Cut

By Sarah Coffey, Boston Business Journal, Financial Reporter
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BOSTON (CBS) – Three out of ten taxpayers are unaware they’re taking home more money due to the payroll tax cut, says a survey by Boston-based John Hancock Financial Services.

That’s up slightly from 2011, when 26 percent didn’t realize their take-home pay had a bit more money.

The survey also found that about 20 percent of taxpayers think they’ll spend that money instead of saving it, compared to 12 percent last year.

Those saying they’ll save that extra money fell to 22 percent compared to 29 percent last year.

One in five of those surveyed said they’d use the extra cash to pay down debt, the same as last year.

One in seven said they’d increased their retirement plan contribution at work, while ten percent invested in a retirement plan outside the workplace.

Of taxpayers getting a refund, nearly half said they’d put the cash in a savings account, while 25 percent said they’d pay down debt.

One in five said they’d spend the refund, the same as in 2011, and 18 percent said they’d put the refund toward their retirement plan outside of work.

Of those spending their refund checks, just over half said they’d take a nice vacation.

More than a quarter will buy basic household items, 19 percent will buy entertainment items, and 16 percent will spend it on home improvements.

Just 13 percent will spend the money on a luxury item, while 8 percent said they’d make a big ticket purchase like a car.

About 53 percent said they expected to receive a Federal refund, and about 30 percent said they expected to owe Uncle Sam. Of those, 84 percent said they’d pay the taxes due from checking or savings accounts.

The findings were drawn from the quarterly John Hancock Investor Sentiment Index survey, conducted by independent research firm Mathew Greenwald & Associates.

A total of 1,006 investors were surveyed Feb. 13 to Feb. 24, 2012.

To qualify, respondents were required to participate in some of their household’s financial decision-making process and have a household income of at least $75,000 with assets of $100,000.

The margin of error is plus or minus 3.15 percentage points.

Lisa van der Pool of the Boston Business Journal can be seen weekdays at 6 a.m. on WBZ-TV.

You can follow Lisa on Twitter at @lvanderpool.

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