Each year, the majority of people who file a tax return wind up with a refund on their hands. Sometimes, that refund is sizable. Otherwise, it's a smaller but appreciated sum.

But what if you're in the minority of filers who aren't entitled to a refund? If you never adjusted your tax withholding following the major 2018 tax code overhaul, then that could be the situation you're in this year. Part of that overhaul involved adjusting withholding tables so workers could access more of their earnings up front, in their paychecks. Some workers, however, got their hands on too much extra money, and if your paycheck went up a whole lot, you could wind up with an underpayment on your hands for 2019. As such, you may find that you owe the IRS money this April when you file your taxes.

Banded stacks of 20-dollar bills


Now the ideal way to cope with a tax bill is to dip into your savings to cover that debt. But new data from tax prep company Jackson Hewitt reveals that only 44% of Americans would pay a tax bill with money in savings. In fact, 21% are convinced they'd need to whip out a credit card to cover that expense.

All of this underscores the need to make one important financial move: build emergency savings. You never know when you might have an unplanned bill on your hands, whether it comes from the IRS or another source, and without cash reserves, you could be looking at unpleasant, finance-damaging debt.

You need money in the bank at all times

Though taxes are due at the same time each year, it's hard to predict whether you'll owe money or wind up with a refund on your hands. The tax system is such that the "pay as you go" model doesn't always work out well. Many people wind up overpaying their taxes and get thousands of dollars back in refund form, which isn't actually a good thing since it means having lost out on that income sooner. But for most people, getting money back is preferable to owing, largely because they can't afford to write the IRS a check.

If you're in that camp because of a glaring lack of emergency savings, then it's imperative that you make an effort to build some cash reserves, especially since you never know where your next surprise bill might stem from. It could be a home repair, an issue with your vehicle, or even a medical situation with a very costly aftermath. But if you build yourself an emergency fund, you'll have the option to cover these and other unanticipated expenses with cash, thereby avoiding debt and stress.

The easiest way to build that emergency fund? Get on a tight budget. Cut back on non-essential spending and put the savings you eke out into the bank. You can also try getting a second job on top of your main one to boost your cash reserves. And if you do wind up getting a tax refund this year, put that money right into savings rather than spend it. That way, if the opposite happens next year, you'll have a means of paying the IRS.

Many filers worry about owing money during tax season, but if you make a point of building emergency savings, you won't have to. You never know when you'll wind up with a tax debt situation on your hands, or when another surprise expense will hit you out of the blue, but if you make sure to sock away a decent sum of cash in the bank, you'll have less to worry about when these things inevitably happen.