After a difficult year for millions of Americans, many eagerly wait for their tax refund checks to hit their bank account.
However, taxpayers will first need to evade fraudsters determined to scam people out of their hard-earned money. Young adults especially will need to remain on guard, as a new study shows that they are at greater risk for tax fraud.
Survey data from ACI Worldwide and YouGov show that 21% of millennials have been targeted by phone scams this year, versus 17% of baby boomers. In comparison, more baby boomers (23%) than millennials (18%) found themselves subject to tax fraud attempts during tax filing season in 2020.
American tax payments go digital
The survey conducted by ACI and YouGov found that more Americans are paying their taxes digitally this year compared to previous years.
This year, 55% of U.S. taxpayers plan on using digital payment methods such as electronic funds withdrawal, debit cards and credit cards for their taxes — showing an upward trend from 2020 (50%) and 2019 (46%).
Furthermore, the use of non-digital payment methods like cash and checks has decreased. Just over 1 in 4 respondents (26%) stated that they would choose these payment types this year, in comparison to 32% of respondents from last year.
This trend toward digital payment methods supports similar reporting from Nacha, which found that electronic payments grew last year while use of paper checks shrunk.
Younger taxpayers at greater risk for tax fraud schemes
Since the start of the pandemic, more Americans have moved toward online services in general, resulting in a 61% increase in digital government services. However, that same survey also found that more young people are willing to try out these apps than their older counterparts, which could point to why they’re at greater risk for financial fraud than other age groups.
Filing taxes comes with a certain amount of risk, since a wealth of sensitive information passes between the taxpayer and their tax preparation software or tax preparer. But because more young adults are comfortable with disclosing their personal information (financial or otherwise) online, the amount of risk they’re subject to increases.
“The survey sheds light on a likely vulnerability with taxpayers who tend to be more confident about sharing their financial information,” said Sanjay Gupta, Executive Vice President of ACI Worldwide. “As digital payments continue to grow, taxpayers need to be more vigilant during tax season.”
Methodology: All data is from YouGov unless otherwise stated. Responses were gathered from an online survey of 1,237 American adults between Feb. 9-10, 2021. The numbers have been weighted to accurately represent all U.S. adults age 18 and older, with the following generational breakdown:
- Millennial: Born between 1982-1999 (398 total)
- Gen X: Born between 1965-1981 (313 total)
- Baby boomer: Born between 1946-1964 (397 total)
Feli Oliveros is a finance and business writer with experience covering personal finance, small business finance, and payment processing. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.