SOURCE: BMO Harris Financial Advisors

March 28, 2014 08:00 ET

Eighty-Five Percent of Hoosiers Surveyed Are Confident in Tax Planning, but Many Are Not Tax Efficient When Investing: BMO Harris Financial Advisors Study

INDIANAPOLIS, IN--(Marketwired - Mar 28, 2014) -

  • Over half of Indiana residents surveyed do their own taxes
  • The vast majority are confident that they take advantage of all tax breaks, but most admit they are not tax savvy when investing
  • Of those expecting a refund for the 2013 tax year, more than forty percent plan to use the money to pay household bills and/or reduce their overall debt load

According to a study issued today by BMO Harris Financial Advisors, just over half of Hoosiers surveyed (51 percent) prepare their own tax returns. Further, the vast majority of respondents in Indiana (85 percent, slightly above the national average) are confident that their completed tax returns will take advantage of all of the tax deductions, tax credits or other tax savings that may be available to them.

However, despite this sense of confidence, over half of the respondents (51 percent) in the state admitted they are not knowledgeable about tax smart investment solutions designed to reduce their overall tax liability, including protecting their investments from a tax perspective and transitioning them in a tax-efficient manner to the next generation. Further, the study found:

  • Only 39 percent (below the national average of 44 percent) understand how capital gains are taxed.
  • Less than half (47 percent- same as the national average) of respondents understand how dividend income is treated from a tax perspective. 

"It's encouraging to know that Hoosiers are upbeat about their 2013 tax returns," said Tom Thornton, Regional Manager of Financial Advisory Services, BMO Harris Financial Advisors. "However, if they want to make sure they're minimizing the overall amount of taxes they pay, then it's important that they appreciate how their investments are treated from a tax perspective. It's crucial to ensure you're maximizing your investment portfolio returns."

Mr. Thornton noted that a financial professional can play a critical role in making an investment portfolio more tax efficient. For example, BMO Harris Financial Advisors works with clients to determine investment solutions which best fit their specific needs and goals. This may include reducing one's tax liability and transitioning assets to the next generation in a tax-efficient manner.

How Hoosiers plan to use their tax refund

The study also examined what those who expect a tax refund plan to do with the money:

  • Sixty-four percent (well above the national average of 42 percent) will cover household bills and/or reduce their debt load (credit card balances and other debt other than mortgage).
  • Thirty-four percent will save or invest (close to the national average of 35 percent).
  • Fifteen percent will spend on home renovations.
  • Fourteen percent will fund vacations or purchase leisure items.
  • Fourteen percent will pay down their mortgages. 
  • Two percent will donate to charitable causes.

"Financial priorities differ depending on an individual's unique situation, but it's great to see that the majority of those who are expecting a tax refund will be thinking about their long-term financial objectives and using the funds to reduce debt or cover basic household costs," said Mr. Thornton.

Key National Findings

  • Forty-eight percent of those Americans surveyed are preparing their own tax returns.
  • The vast majority (83 percent) are confident that their completed tax return will take advantage of all tax breaks.
  • Just under half (45 percent) of the respondents admitted they are not knowledgeable about tax-smart investment solutions designed to reduce their overall tax liability.
  • Just 44 percent understand how capital gains are taxed and only 47 percent are familiar with how dividend income is treated from a tax perspective.
  • Forty-two percent of those Americans surveyed who anticipate getting a tax refund plan to use the money to pay household bills/reduce their debt load; 35 percent will save and/or invest; 16 percent will fund vacations or the purchase of leisure items.

The survey was conducted by Pollara with an online sample of 1,000 Americans 18 years of age and over, between March 7th and March 10th, 2014. A probability sample of this size would be accurate to +/- 3.1%, 19 times out of 20.

About BMO Harris Financial Advisors
BMO Harris Financial Advisors, Inc., offers a comprehensive range of investment advisory products that include financial planning strategies and estate planning strategies to meet the financial needs of high-net-worth clients. Offices are located throughout the U.S. Learn more at

BMO Harris Financial Advisors(SM) is a trade name of BMO Harris Financial Advisors, Inc. Securities, investment advisory services and insurance products are offered through BMO Harris Financial Advisors, Inc. Member FINRA/SIPC. SEC-registered investment adviser. BMO Harris Financial Advisors, Inc. and BMO Harris Bank N.A. are affiliated companies. Securities and insurance products offered are: NOT A DEPOSIT - NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY - NOT GUARANTEED BY ANY BANK - MAY LOSE VALUE.

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United States Department of Treasury Regulation Circular 230 requires that we notify you that this information is not intended to be tax or legal advice. This information cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. This information is being used to support the promotion or marketing of the planning strategies discussed herein. BMO Harris Financial Advisors and its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors.

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