Who Are Millennials? Look at Their Tax Returns
Millennials, otherwise known as self-entitled grown children who mishandle their money, are not exactly confirming their stereotypes if you ask Uncle Sam.
The Tax Foundation recently analyzed tax data from the Internal Revenue Service to find out how America’s largest generation earns their income, what sort of lifestyles they live, and what kind of tax breaks they receive. Millennials are defined as Americans born between 1980 and 2000.
Let’s take a look at three interesting findings from the report.
We’ve all heard that millennials are struggling to find their place in Corporate America. They have no loyalty. They challenge traditional workplace norms. They believe you should work to live, not live to work. They want more flexibility to forge their own path. In fact, Payscale finds millennials are 1.76 times as likely to study entrepreneurship in college than previous generations, while Elance Odesk says 58% of millennials expect to leave their jobs in 3 years or less. However, the IRS data reveals millennials are still working for the man instead of becoming entrepreneurs.
According to tax returns, only 9.32% of millennials reported self-employment income in 2013. That’s below the overall rate of 12.81% taxpayers who reported more than $400 of self-employment income. Considering that even the oldest millennials are barely in their mid-30s, there’s still time for the generation to find its entrepreneurial spirit, if they can climb out from under record student debt loads and an overall sluggish economy. The millennial population is currently estimated at around 75.3 million, and is expected to peak in 2036 at 81.1 million.
Millennials are either risk adverse, terrible gamblers, or good at keeping quiet about their risky money habits. Tax returns show millennials are the least likely generation to report gambling earnings on their tax returns. In 2013, millennials filed 33.61% of all tax returns but only 9.59% of them reported gambling income. Overall, millennials only account for a mere 5.94% of all gambling earnings reported. This echoes similar findings that millennials are quite conservative with their money and at least make an effort to adhere to a budget. Many millennials even avoid the stock market due to a lack of trust or money.
3. Tax breaks
Somewhere between participation trophies and helicopter parents, millennials have gained a reputation for having everything in life handed to them. A quarter of millennials believe their student loans will ultimately be forgiven, but for now, the IRS doesn’t have much to process in regard to millennials and debt forgiveness. Taxpayers whose debts are cancelled usually have to report it as taxable income. Interestingly, most of the reported debt cancellation in 2013 went to older taxpayers. Out of $10 billion of cancelled debt reported on tax returns, only 5.53% belonged to millennials.
That’s not to say millennials don’t receive any help from Uncle Sam. The earned income tax credit (EITC), which is a refundable tax credit for low and moderate income workers, is popular among young taxpayers. Out of the $61 billion claimed through the EITC in 2013, $29 billion went to taxpayers between 18 and 34 years old. In other words, nearly half of the benefit of the EITC went to the 33.61% youngest adult taxpayers.