Tentative deal reached on tax rebates

[sweeps]

I usually enjoy reading articles by Liz Weston @ MSN Money. But this article on the tax rebates doesn't make sense to me.

She says:

This isn't free money for most people.... The rebate checks are basically an advance on taxpayers' 2009 refunds...

I disagree. If the lowest tax bracket is being dropped to 0 in 2008, then that is definitely money saved.

Let's say it's February 2009. And suppose if the "stimulus package" never happened, you're due a $1000 tax refund. Fine.

Now suppose the stimulus package did happen. Your tax refund would still be $1,000, that is true. However you were given an extra $600 (or $1200 or whatever) the previous year that you would not have otherwise received. That to me is free money.

[kilapapipa]

As teachers with 3 kids, our tax liability is easy to figure. We take a % out monthly for FIT. I am usually within $300 as a refund or amount we owe.

We will get $2100 rebate and unless I have to list that as a refund in 2008 on my 2008 return, it is a rebate of my 2007 taxes paid in my opinion.

For the previous rebate of $600 in 2001??, I do not recall entering that as a advance refund on the next year's return???????

[Aleta]

Lets face it. the ones caught owing will be the ones mostly paying taxes. Those paying very little will not have to worry. They need to make the wording on this clearer.

The last time they gave a rebate, I kept my money in a bank until the following year. The same people who waste money will be the same ones using the rebate for items such as Wii's etc. It is a visious cycle.

[MonkeyMama]

Okay, I read so much conflicting stuff, I finally went straight to the source.

I am pretty sure the 2001 rebate was as Liz mentioned. (Hard to remember back that far).

This one is different though. In no case will anyone have to pay any of it back. Yes, they are using 2007 tax returns to figure the rebates, for the advance, but they are technically based on 2008 tax returns.

In a nutshell, if you had no income in 2007 but have some in 2008 - you will get the rebate when you file your 2008 tax return. If you had no income in 2008, or don't qualify for the rebate otherwise, but did receive the rebate based on 2007 tax return, well you just get to keep it! Lucky you. (That is the difference from 2001).

A lot of the news articles I read had the facts wrong.

I assume this means, for example, if you have a child in 2008, you will get a credit ($300 for that child) when you file your 2008 tax return. I haven't seen the child rebate part clarified though. But seems logical with all else I read.

[Aleta]

This was my understanding as well. They kept talking about having to wait for the 2007 tax returns. Also, some are waiting for the ATM patch that happens in February. Those who filed early will have to wait for a refund.

[cptacek]

Originally Posted by Aleta

There should be a limit on that. Someone deciding to have a thousand kids should not be the governments bailout. We as tax payers shouldn't have to bail out people's decisions for having probably kids that they can't afford. I personally, don't have a problem with the older folks. They pretty much live on a fixed income and probably will be the ones to spend the stimulus money out of need.

WOW! Why attack the people with more than 2.3 kids? We are ALL getting a government bailout if/when this goes through...you included!

[neguy11]

Originally Posted by Aleta

There should be a limit on that. Someone deciding to have a thousand kids should not be the governments bailout. We as tax payers shouldn't have to bail out people's decisions for having probably kids that they can't afford. I personally, don't have a problem with the older folks. They pretty much live on a fixed income and probably will be the ones to spend the stimulus money out of need.

This isn't a bailout. They are giving people checks hoping they will spend them to boost the economy. This has nothing to do with "need." And I'm pretty sure someone will a thousand kids is pretty likely to spend this money which is what the government wants us to do.

Originally Posted by jfoster51

Anyway the 10% tax bracket which taxes the first $6000 earned per person will be eliminated in 2008. You will have to disclose that you received a rebate check on your 2008 returns or you would basically get the money twice.

Actually it is a tax credit. The wording of the bill says nothing about getting rid of the 10% bracket....if they did that everyone would get a break, including millionaries, so I don't see how they could put an income cap on it.

While I did not support this plan before, I *do* support it now because it is tax credit and I support tax credits, especially those that benefit me!

[sweeps]

Originally Posted by neguy11

Actually it is a tax credit. The wording of the bill says nothing about getting rid of the 10% bracket....if they did that everyone would get a break, including millionaries, so I don't see how they could put an income cap on it.

Easy. The IRS will analyze everyone's tax records and see if they qualify for the rebate and send it out to just those people. Meanwhile the tax tables at the end of the year will still show a 10% tax bracket so your end-of-year refund/amount owed will be the same as it otherwise would have been. Ultimately those that got the rebate come out ahead of those who did not.

Originally Posted by neguy11

While I did not support this plan before, I *do* support it now because it is tax credit and I support tax credits, especially those that benefit me!

Unfortunately this is the thinking that gets us all into trouble. The whats-in-it-for-me syndrome.

[neguy11]

Unfortunately this is the thinking that gets us all into trouble. The whats-in-it-for-me syndrome.

This government has been deficit spending for years. While I would prefer they not, if they are going to I'd rather I directly benefit than the money be sent straight to Iraq.mEither way I am for lower taxes and in this case, this meffectively lowers taxes for many people.

[kilapapipa]

Originally Posted by Aleta

Lets face it. the ones caught owing will be the ones mostly paying taxes. Those paying very little will not have to worry. They need to make the wording on this clearer.

The last time they gave a rebate, I kept my money in a bank until the following year. The same people who waste money will be the same ones using the rebate for items such as Wii's etc. It is a visious cycle.

I agree with you except for the Wii part. There are a lot of ways to waste money but I would not put the Wii at the top of the list.

[sweeps]

Signed

Time to buy that big screen TV!