Millennial tax returns: A profile of young filers

While young Americans often take flack for their savings habits, this age demographic – burdened by mounting student loan debt – could be looking forward to their refunds even more than other age groups this tax season.

A new survey showed most millennials were stressed about tax season – and that could be because the majority of millennials plan to use their refund this year to pay off debt.

Overall, the young generation accounts for a good portion of the returns filed each year.

According to data recently released by the Internal Revenue Service (IRS), first reported by the Tax Foundation, millennials filed more than 50.5 million returns in 2016 – accounting for about one-third of all returns that year. Cumulatively, the young demographic reported about $1.75 trillion in income – which made up only about 17 percent of total income, indicating the group earned less than other age groups.

The largest source of income among the millennial group by far was wages and salaries – accounting for 93 percent of the total. The next closest source of income came from business net income.

The overwhelming majority of younger Americans took the standard deduction – 44.3 million – compared with nearly 6 million who itemized. That trend is likely to continue – and perhaps even increase – as the standard deduction nearly doubled under the Tax Cuts and Jobs Act to $12,000 for individuals and $24,000 for married couples filing jointly.

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Tax season for 2018 returns is scheduled to open on Jan. 28.

Some millennials, meanwhile, are among those who have struggled to regain, or gain, their financial footing in the aftermath of the financial crisis. Burdened by record levels of student loan debt, the Federal Reserve concluded that mounting levels of student loan debt have prevented hundreds of thousands of young Americans from becoming homeowners.