It’s time to start thinking about taxes. Yay. Just like last year, we polled 1,200 Americans to get the latest on what tax software they used and how much they paid to prepare their taxes in 2022.

One of the surprises in the last 12 months that no taxpayer can escape is inflation. It increased 7% in the last few years, compared to just 1.4% in 2021. 

With higher costs for everyday items from gas to milk, stressed-out Americans are looking for a side hustle or cutting expenses where they can. But what about paying for their taxes? 

Here’s what we discovered.

Key Findings

• Cost To File Federal Tax Return: 30% paid $0, while 5% paid over $500
• DIY vs. A Tax Professional: 45% used tax software to file on their own
• We reveal the most popular tax software: 59% used it (sorry, you have to scroll down and see the answer)
• Self-Employed vs. Employee: 60% filed as a W-2 while 27% were self-employed

How Much Americans Paid To File Their Federal Tax Return

The cost of preparing your taxes can vary wildly. Some can file for free every year while others with more complicated financial situations feel more comfortable if they hire a tax professional. 

Here’s what we discovered for how much people paid for both federal and state taxes.

The cost to file a federal tax return:

How much does it cost to file a state tax return:

How People File Their Taxes

Our survey found that 45% of people filed their taxes using a DIY method with TurboTax, H&R Block online, FreeTaxUSA, and Cash App Taxes, to name a few. 

• From these companies that also offer full-service virtual help, 11% took advantage of it
• 27% used a full-service accountant or CPA. 
• Surprisingly, 15% took to pen and paper to get their taxes done.  

What Tax Software Did Americans Use?

There are so many options—don’t forget that we have extensive reviews of many of them on The College Investor. Here are reviews for The Best Tax Software and Free Tax Software.

So which one did our respondents use? 

• TurboTax—a whopping 59%
• H&R Block came in second place, with 13%
• Cash App Taxes at 6%
• FreeTaxUSA at 3%
• Jackson Hewitt at 2%

What Matters Most When Selecting Tax Software?

So what’s so great about TurboTax and why did 59% choose it? 

The number one reason people choose one tax service over the other is due to ease of use. An overwhelming 71% of respondents said this was the most important factor when choosing one tax software over the other. 

This finding stayed consistent with last year’s survey. When asked if they were going to use TurboTax again for their taxes in 2022, 83% said they would.

Just like last year, 66% said that price was the second most important reason when picking a specific software.  

How Did Americans Receive Their Tax Refunds?

Direct deposit was the most popular method (73%) of how respondents said they prefer to receive their refunds. It’s the easiest and quickest way to get your money. All you have to do is select it as your refund method through the tax software. 

Then, provide your bank account number and routing number. Or if you’re using a tax service, tell your tax preparer you want direct deposit. 

Eleven percent of filers chose to get their refunds by waiting on a paper check in the mail while another 11% preferred their refund in the form of a prepaid debit card. 

When asked why this group doesn’t use direct deposit, 14% said they don’t have a checking account while 56% said they simply prefer a prepaid debit card. 

Surprisingly, 21% admitted they didn’t know direct deposit was an option.

How Did Americans Prepare Their Taxes?

From our survey, 14% filed as head of household, 52% filed as single, while 27% filed as a married couple. 

Only 5% are married, filing separately. A benefit of going this route is if there's a big disparity in a couple’s incomes. For example, if the spouse who doesn’t make as much is eligible for a lot of itemizable deductions, it could be worth going this route.

If you’re married, you can use a higher standard deduction, which is twice the amount of a single person's deduction. For 2021, the married standard deduction was $25,100. (In 2022, it increased to $25,900.) This is the amount you can deduct from you and your spouse’s income.  

Income Sources and Claims

Income sources are also an important part of tax filing costs and is the foundation for the way tax software sets their pricing structure. For example, if you have self-employment income, or investment income, you could be forced to use a "higher tier" of tax software.

The majority, 60%, had W-2 wages while 27% identified as self-employed. Remember, self-employment also applies to side hustle income.

Being claimed as a dependent on someone else’s taxes (like your parents), can also affect your taxes. From our survey, 68% said they would not be claimed as a dependent, while 31% said they would. 

‘Free’ Tax Software Isn’t Really Free

With inflation on the rise, it makes sense to want to cut costs where you can, but be careful when it comes to your taxes. While many tax companies such as TurboTax and H&R Block offer free or low-cost options for filing, not everyone qualifies. 

You may start off using the free version, but then quickly realize you need to upgrade in order to complete your taxes. 

The only fully-free software for filing your taxes is Cash App Taxes, previously known as Credit Karma Taxes. However, there are limitations. The IRS also has a free way to file, as long as you have a total adjusted gross income of $73,000 or less. 

Use Direct Deposit And Open A Checking Account If You Don’t Have One

This year’s survey revealed a few shockers, including 21% saying they did not know direct deposit was an option. The other surprise was that 14% completely lacked a checking account. 

Perhaps this is the year to open a checking account, there are so many free options to choose from. There’s absolutely no reason to have to wait around for a paper check in the mail when you could receive your refund lightning fast from direct deposit. These are our best picks for free checking accounts. 

Don’t forget to check out the best tax software from The College Investor—where we review TaxAct, TaxSlayer, Cash App Taxes, FreeTaxUSA, Tax Hawk, and more.

It makes headlines daily, you see it in higher utility and grocery bills, and of course the price of gas is still sky high—we’re talking about inflation.

In a new College Investor survey, we asked if people were stressed about money because of rising inflation, and a resounding 86% said yes. 

With the holidays fast approaching, inflation, which has increased over 8% in 2022, is weighing heavily on all of our minds. 

According to the National Retail Federation, consumers plan on spending around $833 on gifts, decorations, and food. But if you’re finding it difficult to keep up with bills and everyday expenses, spending anything extra, much less $833, feels unattainable.  

Our survey asked about side hustles and what kinds of work people were doing outside of their “main’ job to help afford the rising cost of everyday expenses. What percentage of people were side hustling? How were they planning to pay for holiday gifts this year? 

The results show that while inflation is stressful, it’s also sparking the desire to pick up a side job for extra dough. Let’s explore the details from our survey. 

Who’s Side Hustling?

The majority of respondents, nearly 55%, have a side hustle. This extra income can improve wiggle room for monthly expenses such as rent and utilities, which is exactly what 65% use it for.  

With seventy percent of respondents being stressed for the dough to pay for presents, only twelve percent said paying for holiday gifts is their motivation for side hustling.

Other interesting findings around include:

What Kind of Side Hustles Are People Doing?

Extra money comes in all kinds of flavors thanks to the internet, rideshare, and delivery services. We thought it would be interesting to find out what kind of side hustles people are into, and here’s what they said:

How Do People Plan on Buying Gifts This Year?

Again, the majority of respondents said they were going to turn to their trusty side hustles to fund their holiday purchases. Here were the complete responses:

• 49%: Income from side hustle
• 21%: Credit cards
• 13%: Buy Now, Pay Later
• 10%: Gift cards
• 3%: Credit card rewards
• 2%: Personal loans

An important factor in sustaining a side hustle is motivation. The biggest reason in having a side hustle was to be able to pay for everyday expenses. Here's what else we discovered about what people were doing with their extra money: 

Are You Prepared For This Season? 

A side hustle comes in handy to cover higher everyday expenses brought on by inflation as well as pay for presents and holiday expenses. 

If you’re ready to jump into a side hustle, we have plenty of ideas for you to get started. You can get started by filling out surveys for a little extra cash or see our articles for how to get started with DoorDash or Uber. 

With the uncertainty around inflation, it’s a great time to pick up a side gig so you can have a little bit of cushion to get through the holidays and beyond.

 If a side gig isn’t your thing, see the best kinds of investments for inflationary periods. 

Once upon a time, the life of a college student meant going to school and then working full-time after graduating. 

With increasing tuition costs and inflation contributing to the rising cost of living, students are now doing both. According to a new College Investor survey, 62% said they work full-time while also taking a full course load. Eighty-eight percent said they do it because they need the income.

This means students might be stretched thin from trying to do it all—it’s a familiar and stressful dance of a 40-hour work week, attending classes, studying, and trying to enjoy some semblance of college social life. But despite the perceived difficulties of balancing work and school, 75% of survey respondents said they would continue to work, even if their school and living expenses were completely paid for. 

Here are other income-related findings from our survey:

• 81% said this income helps minimize their student loan debt
• 51% worked to cover the cost of living
• 11% said they worked because their parents made them

41% Find Value In Working

Even though 42% of respondents said working full-time takes away from study time, 41% said they actually enjoy working.

Perhaps these students have experienced the benefits of work that extend beyond the classroom. Meaningful work, responsibilities, working on a terrific team, and having goals to fulfill will no doubt prepare students for the post-graduation workforce. Thirty percent said they work to build their resume. 

Even if their entire school and living costs were covered, 75% said they would still continue to work. Gaining useful technical and soft skills could be core reasons why students would still choose to work. 

35% Believed A Full-time Job Negatively Impacts Their Grades

Which is worse, cramming for a final or knowing your work colleagues are upset at you for messing up on the last project? The impact and strain from work vs. school can be rough.

According to our survey, work time can bleed into school time:

On the contrary, 65% said work doesn’t negatively impact their grades and 35% never skip classes because of work. 

Here are more interesting takeaways: 

• 33%: School and work were equally stressful
• 26%: Work never takes away from studying
• 7%: Frequently skip class because of work 

College Is Crazy Expensive

In light of the soaring prices for college, some students are ditching college all together while others work full-time to get through it.

Is working a full-time job while you’re in school an unavoidable part of college life? According to our survey, it’s both a necessity and desire. It helps reduce overall debt while likely the burden of taking on new debt. 

In planning for life after college, a smaller student loan balance and gaining work experience that can’t be taught in the classroom are all a part of a successful entry into the real world. 

What do you think? Would you still choose to work if you didn’t have to? Let us know in the comments section below.

Methodology

The College Investor commissioned Pollfish to conduct an online survey of 1,000 American college students. The survey was fielded September 30, 2022.

As someone who has suffered through more than a decade of paying student loans, I think President Biden’s decision to cancel $10,000 of student debt is a good thing.

As The College Investor’s editor-at-large, I thought it would be interesting to see how others felt about it. 

So, we polled 600 people—roughly one-third who had student loans, and the remaining respondents either paid them off or never had them to begin with. Sixty-three percent said they support Biden’s decision to forgive student loans.

My 10 Long Years Of Paying My Student Loans

I was both surprised at this debt cancellation plan and happy for the low- to mid-income borrowers whose debt loads would suddenly be $10,000 lighter (or $20,000 if they have Pell Grants). Selfishly, I wished I was one of them. I thought about the decade I was bogged down with my own student debt. 

Upon graduation, I became a public school teacher, so basically, I was poor. For years, I was only paying the minimum monthly amount—a few hundred—to cover the interest on my $25,000 principal balance. This is why it took me a decade, and trust me, I had a lot of time to regularly daydream about being debt-free and how it would affect my life. I could set up an emergency fund or use that money to start investing. But let’s be real, I was young, so I mostly wanted the extra funds for traveling and buying things.

By year 10, just when I couldn’t stomach the thought of this debt following me around for one more month, I saw I was approaching the final payments. It was the homestretch. I still remember sitting in front of my laptop on the day I made my last payment. After clicking “Pay Now” for the last time, I felt an emotional confetti sprinkling down from above, showering me with a newfound sense of freedom and elation. 

I would imagine it’s the same sort of feeling when borrowers had when they first learned about Biden’s plan. Despite this win for them, not everyone is so enthusiastic.

The Naysayers, And What About Rising Inflation Rates?

We’re now seeing inflation rates at a 40-year high, but experts can’t even give a definitive answer on whether we’re actually in a recession. Short answer: we’re likely not in a recession now, but is there one ahead?  

With all this uncertainty, it’s no surprise not everyone is jazzed about Biden’s plans. An initial report said Biden’s student loan cancellation will cost taxpayers around $400 billion, or just over $2,000 per taxpayer. 

Despite these projections, our survey respondents were split on whether they expected a negative impact on inflation—51% believed debt cancellation wouldn’t make inflation worse, while 49% thought it would. 

Is Student Debt Cancellation Just A Bandaid?

Inflation aside, critics argue Biden’s plan is only addressing symptoms of an antiquated (and incredibly expensive) university infrastructure that tips in the favor of the privileged. 

It leaves many of us asking:

• Why and when did it get so pricey to get a degree? 
• Should colleges be held accountable when students go through the university system and aren’t able to secure a job? 
• How can we make higher education more widely accessible, financially?
• What are we doing for future loan borrowers? Roughly $90 billion in new student loan debt was originated in this year alone.

While the President says he remains focused on keeping costs for college under control, we still have a long way to go to fully address these questions or come up with viable solutions.  Colleges like Purdue are recognizing this need for students to be debt-free upon graduation. In lieu of paying for tuition, students pay the school a percentage of their post-grad income. The more the grad makes, the more Purdue gets. 

It’s not perfect, but helps ensure new grads aren’t crushed under a mountain of debt upon entrance to the working world. It’s an alternative option to cover the cost of education. When I was in school, I wished I had more of these types of options, outside of loans or a job. (Of course, I also wish I could’ve watched $10,000 suddenly disappear from my loans back then!) 

So, What Now?

Before you get too excited, make sure you actually qualify—almost 26% of our survey respondents said they weren’t even sure if they did. Your income can’t be higher than $125,000 or if you’re married, $250,000. Don’t miss our in-depth article that explains the nuts and bolts of qualifying and applying.

While some borrowers can expect automatic cancellation of this debt from their overall student  loan balances, most will have to apply. After you do, the Education Department expects it will take four to six weeks for the $10,000 to be canceled from your loan balance. (Or if you have Pell Grants, up to $20,000.) 

Officials are encouraging borrowers to submit the application no later than Nov. 15, 2022, but technically, you have until Dec. 31, 2023.

Subscribe to the U.S. Department of Education so you know when the student loan forgiveness application is ready.

For more on student loan forgiveness, see our post on Student Loan Forgiveness Programs.