For many Americans, tax refunds are an annual windfall that helps strengthen their finances, allowing them to pay down debt, put some money away, or buy something slightly indulgent. The average taxpayer expects $2,019 from their tax refund, according to a new survey of 2,012 taxpaying Americans by tech website Decluttr.

The good news is that many Americans plan to use at least some of their refund to pay bills or to boost their savings. Four in 10 of those surveyed plan to use a portion of their refund to put money away in a savings accounts or a certificate of deposit (CD), and the same number (40%) planned to use the funds to pay off credit card debt.

Tax forms sit next to a calculator.

Americans plan to spend their tax refunds on everything from bills to electronics. Images source: Getty Images.

Where is the money going?

Many Americans (42%) expect to use at least some of their refund to pay off debt, according to the survey.

In many cases, these debts are everyday bills, including utilities and mortgage payments:

Debt/Bill Category

% of People Spending in This Category

Credit card bill

39%

Utilities

24%

Rent/mortgage

23%

Personal loan

15%

Student loan

13%

Data source: Decluttr.

The fact that so many Americans are counting on their tax refund to pay off everyday bills is a sobering indication of how Americans are doing with their personal finances. But, it's encouraging that 40% plan to save, at least some of their return. Saving money -- whether in a savings account or by making an investment -- can build a cash cushion that can help you in case of an emergency.

In some cases, this type of saving is the continuation of good habits and planning for the future. For others, this will be their first step on a long road toward getting their finances in order. No matter, it's a good idea to develop a habit of saving or investing a portion of any unexpected income.

The below chart shows how the 40% of survey respondents who saved at least some of their refund allocated those dollars:

Savings Category

% of People Spending in This Category

Savings accounts or CDs

44%

Individual stocks and bonds

16%

Mutual funds and ETFs

11%

College savings plan

9%

Data source: Decluttr.

Of course, not every American plans to put money away for a rainy day or use their refund to pay off bills. Nearly half expect to spend the money on travel (25%), shoes/apparel (23%), electronics (20%), and home and garden (13%).

What should you do with your tax refund?

How you spend your refund (assuming you're getting one) depends upon your financial situation. If you have overdue utility bills or you're behind on your mortgage or your rent, it's important to pay those bills first even if it means not paying down high-interest loans.

After your immediate needs are taken care of, if you have high-interest debt like credit card balances or personal loans, pay those off or at least pay them down first. That will be the best return on your money, since the interest you would have paid would almost certainly exceed any returns you could earn on that money by investing it.

If you're current with your bills and you have no high-interest debt, how much you save from your refund depends upon your personal situation. Do you have an emergency fund that could support you for three to six months of unemployment? Have you been saving regularly for retirement and could your portfolio use a supercharge?

If you're behind in either of those areas, you can allow yourself a small indulgence (maybe a nice dinner or a modest weekend trip), but save or invest most of the money in your tax return. Of course, if you're in superb financial shape, consider using more of the money for fun purposes. If you've already handled your finances well, you've earned it.