Why Tax Time Is the Most Wonderful Time of the Year - OZY | A Modern Media Company

Why Tax Time Is the Most Wonderful Time of the Year

Why Tax Time Is the Most Wonderful Time of the Year

By Sally Durdan


Because your financial health is as important as your physical well-being. 

By Sally Durdan

OZY and JPMorgan Chase have partnered to take a deeper look at how businesses can impact society for the better. Enjoy the rest of our special series here.

I’ve got a very unpopular opinion, but maybe I can try to convince you. I think “tax time” is one of the best times of the year for Americans. I know, most people would argue it’s the exact opposite. But tax time, to me, is an opportunity that can help people.

Tax refunds, you see, are often the largest lump sum a person will pocket in a year. Research by the JPMorgan Chase Institute found that tax refunds tend to have a bigger impact on people than getting a new job. Still, given that a tax refund can boost financial well-being so significantly, there isn’t a lot of protocol out there in terms of how to use that potentially game-changing sum.

Just one example to put that into perspective: The research also found median income households fall $1,800 short of the emergency buffer they need to withstand the income and spending shocks they’ll typically experience. That $1,800 is around half of last year’s average tax refund of $2,895.

Figuring out the little “nudges” that guide people into forming better habits is the key to improving financial health. 

It’s clear to me, then, that we need better education around just how useful a tax refund can be, and how to use that refund when it comes through. As the head of strategy for consumer and community banking at Chase, it’s my responsibility to develop how we meet the financial needs of Americans. Financial education for consumers, I’ve found, is so important — and I think that education today is best delivered through a combination of technology and behavioral science.

Technology, of course, is now the conduit through which most people get their information and conduct their lives. But technology alone can’t ensure that people learn lessons. Human beings generally know what they should be doing when it comes to things like looking after their health and their finances. But that doesn’t mean they behave the way they know they ought to. Behavioral science, however, helps us understand what motivates people to behave in a certain manner. Figuring out the little “nudges” that guide people into forming better habits is the key to improving financial health.  

One reason I sound so sure of this is the Refund to Savings program. The largest savings experiment ever conducted in the country, and supported by JPMorgan Chase, it tests “behavioral nudges” in tax preparation software. The program has learned that suggesting specific savings targets makes it more likely that filers will meet those targets and save more of their refund. This works so well because people are being presented with the information they need at the exact time they need it. Having seen this influence positive financial decisions, we are now sharing these insights with the Volunteer Income Tax Assistance program, which offers free tax preparation to lower income customers.

I see this as the beginning of how technology and innovation are helping influence long-term savings strategies and greater financial security for people nationwide. Embedding this into more services could be a real breakthrough for the financial health of both the American people and the national economy. So let’s not treat “tax time” like the enemy. It comes in peace. 

Sally Durdan is head of strategy for Chase Consumer & Community Banking.

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