Should have know the tax rebates would have a little clause in them...

[StacyWithFourRugrats]

According to the CNN article, most (if not all) of the rebates will be deducted from next years' tax refunds. So this is just basically an advance on next year's tax refunds. Oh boy! The government appears to be helping people get into more debt by giving them money they don't have yet (and possibly won't be getting next year!).

 

So some people will be getting tax rebates and yet don't generally get a tax refund at the end of the year. So next year they will be paying. Niiiiiiiiiiiiice.

 

Does anyone else see a problem with this? I wish I could tell the gov't what they could do with my rebate check. I don't want it. :eek:

 

Anyone else hear something different? I am still hoping the CNN article got it wrong.

 

http://www.cnn.com/2008/POLITICS/02/08/economic.stimulus/index.html

[Basketmaker Amy]

You are right...it is the same way they treated them the last time.

[kat19]

cause hubby only makes so much money.

So we usually get a refund back no matter what.

Which is nice for us, but bad for others..

 

I wish it would be different. It's not always fair

[lynn]

nt

[A home for their hearts]

I think it's just a bandaid fix but I'm all for the taking. I think a lot of people are mislead into thinking that it's free money that the government is handing out and it's not. It's just an advance on taxes for 2008. It will help my family right now with bills, but we won't be contributing it to the economy at all like the govt. is hoping, which I think will be the case for a lot of families.

[Janna]

That's what I was trying to say a few weeks ago here, but was told that wasn't the case. I don't see how it's not though (and didn't understand how I was misinterpreting it a few weeks ago, either).

 

I am agitated with it. I wish we had a choice in the matter. I wouldn't take it if there was a choice. As it is, I hope dh and I can hold onto our conviction and not cash it even when we need the money.

[Daisy]

Will it literally reduce our tax check by $1,200 next year or does it just count as taxable income? I cannot figure this out. If it is literally going to drop our return check by that much next year, then I need to just save that money. We rely on part of our tax refund for summer income as DH doesn't get a pay check in the summer. I'm terribly confused by this whole stupid thing and I'm NOT usually a moron. Grrrr. :confused:

[Elisabeth in IL]

Will not cashing it make a difference? I would think that it would be better to cash it and put it in it's own savings account and forget about it until next tax season.

[KarenNC]

That's what I was trying to say a few weeks ago here, but was told that wasn't the case. I don't see how it's not though (and didn't understand how I was misinterpreting it a few weeks ago, either).

 

I am agitated with it. I wish we had a choice in the matter. I wouldn't take it if there was a choice. As it is, I hope dh and I can hold onto our conviction and not cash it even when we need the money.

 

I would rather cash it and put it in a cd or savings account than simply not cash it. If you put it into a cd that matures next spring, then you won't be able to spend it, either, but it will be earning interest and available when you would normally be receiving it.

 

My husband's grandparents had seasonal income and I liked her strategy to keep funds flowing throughout the year. She would figure up the basic predicted expenses for each month then when they had income coming in, she would buy cds with staggered maturity dates, one maturing each month. That would make sure they had the basics covered each month and the money wouldn't be spent ahead of time.

 

I would be concerned that a) the government would deduct that from my refund anyway in their accounting system regardless of whether I cashed it, so I would be out the money (or at minimum face a huge hassle to straighten it out) or b) that if I held on to it and wanted to cash it when I got my refund next year, the check may have expired (some do within months if they are not cashed, don't know about these).

[PariSarah]

Will it literally reduce our tax check by $1,200 next year or does it just count as taxable income? I cannot figure this out.

 

This was my question. My sister, the brilliant, the wise, the all-knowing, who is a CPA and does our taxes, says that it will count as taxable income. (Which means you would have to pay taxes on it, but it wouldn't increase your tax bill by $1200 or whatever you got.) But since the measure hasn't passed yet (it hasn't, has it?), it's hard to say exactly how it's going to shake down.

 

Bottom line: pay very, very close attention to the fine print!

[A.J. at J.A.]

According to the CNN article, most (if not all) of the rebates will be deducted from next years' tax refunds.

http://www.cnn.com/2008/POLITICS/02/08/economic.stimulus/index.html

 

I'm sorry, I'm trying hard but I don't find that in the article...can you quote where it says that specifically?

 

Thanks,

Angela:confused:

[Beth in Central TX]

Hi Angela,

 

I'm in the same confused boat that you are in. Everything that I have read shows that it is an elimation of the 10% tax bracket for 2007. At best, we could get a 1099 next year counting it as income, but I don't see where it is an advance of next year's tax refund. Here's a link for the clearest explanation that I've found:

 

http://www.bargaineering.com/articles/2008-tax-rebate-stimulus-package-explained.html

 

I'd be interested in other links showing that it is an advance of next year's tax refunds.

[Adrianne]

The Congress just past it. I heard this on NPR this morning.

 

I heard it was going to be treated like last time. I will count as taxable income NOT be deducted from next years refund.

 

Adrianne

[Janna]

Tax refund

[lynn]

Okay, you all win. Since we have no debt I guess we'll have to spend it. Maybe a trip to disney, a pool, or a shopping spree lol. Which would you choose. :p

[Mom2GirlsTX]

Okay, you all win. Since we have no debt I guess we'll have to spend it. Maybe a trip to disney, a pool, or a shopping spree lol. Which would you choose. :p

 

Actually a trip to Disney sounds pretty good :)

[Beth in Central TX]

Okay, I read through the article. There's a problem with her statement :"To produce this cash, Congress created a one-time tax credit to reduce taxable income for most taxpayers this year." A one time tax credit to reduce taxable income does not make sense. Either it's a tax credit that directly offsets your tax bill on line 44 of the 1040 (like a child care credit) or it's an adjustment to gross income (like an IRA deduction). I haven't seen the legislation, but I think it's going to be shown as a credit to your tax bill (line 44) and then the same amount will be offset as other taxes (like an advance on the earned income credit). The way I see it, there will be no change on next year's tax return because the amounts will wash out. A credit to your tax bill goes in, but a debit takes it out because you received the money already. If you don't change your W-4 in anticipation of the refund, you shouldn't owe any additional money when filing your 2008 taxes next year because of this year's tax rebate.

 

Obviously this issue isn't very clear. I'm sure I could be reading it wrong...

[Kate CA]

Tax refund

 

This just makes me so angry. It will sincerely mess with some people next year and that is just awful. It will not make much difference to us, but this is just so disingenuous. They really make it difficult to understand it all. (This thread is case in point!)

 

I wish they would do what they were elected to do, but I guess that is asking too much.

 

I am glad God is in control because no one in Washington seems to have any at all. :eek:

 

Kate

[nancypants]

They do this type of thing here all the time. In my opinion they do it to make people feel thankful to nice BIG cuddly Grandpa Government and thank him for giving them their own money back... How about just not take as much in the first place!

 

Here they give everyone a special childcare check every month for children 6 and under... and then they tax you on it. Gee thanks! Grrr! Stoopid.

[Jennifer in MI]

How about just not take as much in the first place!

 

 

Amen!!!

[StacyWithFourRugrats]

LOL For some reason, CNN took out the sentence in the article stating that this tax "rebate" was an advancement of next years tax return. I wonder why that is?

 

Though was is aggravating is, as someone mentioned, the last of a clear cut answer. What really are they trying to hide huh?

[StacyWithFourRugrats]

Ok, now CNN has another article with "all" the answer you need to know, or what they can find out, about the tax rebates.

 

http://money.cnn.com/2008/02/08/pf/taxes/rebates_what_you_need_to_know/index.htm?cnn=yes

 

I still don't understand the part titled "Do I have to pay the rebate back?" Are they saying that they created a tax cut that would have affected your 2008 taxes giving you an additional amount of money in 2009 (the money you will receive with this rebate check)?

 

Or are they saying that they are just giving you an advance on your 2008 tax return? (ie you normally get around $5000 back on your tax refund after credits and everything - hey, not everyone is perfect about all those deduction things...hehe - and instead you will only get $2600 - the $5000 minus $2400 tax rebate for joint filers with 4 kids) Basically saying they didn't change the tax code but instead are giving you an advance.

 

I am by no means a non-intelligent woman (ok, let's just not go there ok?..and ignore that possible double negative) but this has me all confused. I can't imagine that most Americans are understanding this. However, they just don't seem to be spelling it out very clearly where ANYONE can understand. Give the public some examples folks!

[MomofSeven]

Thanks but no thanks. Please pay off my SS, national debt, etc. first before mailing me this election-year bandaid.

[Brenda in FL]

I still don't understand the part titled "Do I have to pay the rebate back?" Are they saying that they created a tax cut that would have affected your 2008 taxes giving you an additional amount of money in 2009 (the money you will receive with this rebate check)?

 

Or are they saying that they are just giving you an advance on your 2008 tax return? (ie you normally get around $5000 back on your tax refund after credits and everything - hey, not everyone is perfect about all those deduction things...hehe - and instead you will only get $2600 - the $5000 minus $2400 tax rebate for joint filers with 4 kids) Basically saying they didn't change the tax code but instead are giving you an advance.

 

I am by no means a non-intelligent woman (ok, let's just not go there ok?..and ignore that possible double negative) but this has me all confused. I can't imagine that most Americans are understanding this. However, they just don't seem to be spelling it out very clearly where ANYONE can understand. Give the public some examples folks!

 

I think your first guess is the correct answer. Look at it this way - In your 2008 tax return there will be a one-time tax credit. I imagine that there will be a worksheet to figure out the credit. Yours would come to $2400, then there would be a line on that worksheet to record the rebate you recieved this year. The result would be 0. You are paying no more or less than you did the previous year (assuming all other factors remained the same). Now if you have a baby in 2008 you will get another $300 for that child as a tax credit against your 2008 tax bill. The CNN article states that if they paid you more in 2007 than you were due (suppose your income is greater than $150,000 in 2008) - you get to keep the difference.

 

I hope that helps.

[finding_sanctuary]

Stacy: I believe, from what the CNN article is saying, that the money is an advance on next year's taxes, BUT it's an advance on a credit that was created specifically to give you more money back on your taxes.

 

Example...say this year (2008), DH made less than the $150k cap for married couples. We have two kids. This means that for our 2008 taxes, we'd qualify for an additional credit of $1200 for us plus $600 for the two children, totalling $1800. This is in addition to any money we would already receive for a refund. However, the IRS will be sending out the money in May-June as an advance instead of waiting to give it back at tax-time next year. So...it's not an advance of money you'd already have been receiving. It's an advance on a new credit that will add to any you'd have been receiving anyway.

 

--

 

I'm not sure this idea will work as well as Congress and the rest hope it will. I know that, since we can't opt out of receiving this, DH and I will just be using it to pay down debt and maybe put some into our emergency fund. As someone said, it's a band-aid, and election-year stunt to show that politicians are "doing something". Going out and spending the "windfall" (ha!) won't fix the problem.

[1bassoon]

. . . and on a Friday afternoon.:confused:

[LizzyBee]

This is not simply an advance on next year's (potential) tax refund. You won't have to pay it back with next year's tax return. There is going to be a one-time tax cut or credit (I haven't had a chance to read all the details yet), so your tax liability will be less by an amount = to the rebate.

 

The rebates will begin being paid in May or June, but they will be based on your 2007 tax return. So I would expect that if you don't file your 2007 tax return until October 15 (when your extension expires), you will not receive your rebate until sometime later than that.

[j.griff]

 

Though was is aggravating is,

:D I'm LOL, this sentence just made me

[j.griff]

yeh y'all, ya ain't gonna be payin nuthin back fer this, 'cept mayhaps state taxes on the check you get this year (Alabama will charge tax on it as income for SURE, they always do).

[Renee in NC]

This is not simply an advance on next year's (potential) tax refund. You won't have to pay it back with next year's tax return. There is going to be a one-time tax cut or credit (I haven't had a chance to read all the details yet), so your tax liability will be less by an amount = to the rebate.

 

The rebates will begin being paid in May or June, but they will be based on your 2007 tax return. So I would expect that if you don't file your 2007 tax return until October 15 (when your extension expires), you will not receive your rebate until sometime later than that.

 

Won't this affect inflation then?

[StacyWithFourRugrats]

LOL I cant tipe. Whet kan I sey? Meez cant thunk ither. (wow, it is really hard to type st*pid)

[j.griff]

LOL, it's like when you accidentally say something backwards out loud (like a Bushism or something) and then you can't do it on purpose when you try to tell somebody what you said and why you are laughing. :D

ITU,though. It's just that reading that sentence made my brain short circuit trying to understand it, LOL (like instruction manuals). :D

[Robin in Tx]

Consider this scenario. The tax return you prepare a year from now will be for 2008 taxes. The govt. has decided to give a break/credit for *this* year's taxes (2008) in the form of a credit, similar to the $1000 child tax credit that is currently provided. So, when you go to prepare your tax return for April 15, 2009, you will see a line item credit that will give you an automatic credit on your tax liability for $1200 per couple, $300 per kids. Let's suppose that your money due would have been $0. You don't owe them, and they don't owe you. It's a perfect zero. If a credit hadn't been issued, you would be getting nothing back. But they *are* going to issue a credit, so now you *will* be getting a refund. Let's say it's $1800 - a family of four. Before it was $0/break even. Now it's an $1800 refund. You'll get that $1800 check, the one time tax credit for 2008, sometime in 2009, depending on when you file your return.

 

Now, the government has decided that since that credit is for financial relief in 2008, they don't want you to have to wait until the middle of 2009 to get it. Why collect all the money from you now, just to hold on to it and refund it a year later? So, what they do is send you the refund now based on the filing status/number of dependents you claimed in 2007. So they mail you the $1800 now, and then you show on your 2008 return that you've already received it, and you're back down to a $0 refund in 2009, just as you would have if there had been no special tax credit.

 

The only way you will be stuck owing money on your 2008 return would be:

 

1) if on your 2007 tax return you claimed dependent children that you don't claim on your 2008 return or,

2) if in 2007 you earned, as a couple, less than $150,000, but in 2008 you earned over $150,00 so now you are ineligible. Then you wouldn't get the credit on your return, and you'd have to pay that money back.

 

If your dependent status remains the same and if your income level doesn't go over the cap this year, you will be okay, and your tax return next year will not be any different.

 

This is not extending credit. We all (most of us, that is), pay monthly to the IRS to cover our tax debt at the end of the year (some of us file quarterly... same thing, though). We pay in advance, and reconcile at the end of the year. What the IRS is doing, in essence, is collecting less in 2008. And so that we don't have to wait to realize that reduction, they are refunding that money in the same year that they collected it.

 

Here's another way to look at it. Let's suppose you find out in January that your tax bill for that particular year is going to be reduced by about $1800. You don't want to pay all that money to the government and then wait for them to return it months later. You want to break even on your tax return. So you adjust your withholding to reduce your federal tax contributions by about $150/month. That puts you at break even at the end of the year, and it puts an extra $150 a month in your pocket (for a total of $1800 for the year). And you break even at the end of the year. I believe that this is the exact same thing... instead of asking you to adjust your withholdings, they are simply writing you the check directly instead. Same net difference, though.

 

That's how I understand it.

 

HTH,

Robin

[Mamagistra]

nice BIG cuddly Grandpa Government

 

ROFLOL!

:D

[Daisy]

Thank you, Robin! I understand!!

[Robin in Tx]

Won't this affect inflation then?

 

Yes... and that's what it's intended to do. Inflation is the opposite of recession. The premise is that a little inflation is a good corrector to a recessionary period.

 

 

Robin

[Barb_]

Robin, I was with you until this part:

 

The only way you will be stuck owing money on your 2008 return would be:

 

1) if on your 2007 tax return you claimed dependent children that you don't claim on your 2008 return or,

2) if in 2007 you earned, as a couple, less than $150,000, but in 2008 you earned over $150,00 so now you are ineligible. Then you wouldn't get the credit on your return, and you'd have to pay that money back.

 

This quote here addresses the above scenario, I think:

 

Do I have to pay the rebate back?

 

No. And here's why.

 

Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.

 

It's based on your 2007 income initially. If it turns out that your 2008 income and number of children would have qualified you for a larger rebate than the one you received, you'll be sent the difference. If it turns out your 2008 income was lower than in 2007 and you should have gotten a lower rebate, you get to keep the difference.

 

"If you were supposed to receive a larger payment than you did, you will get the extra money," said Treasury spokesman Andrew DeSouza. "If you received more than what you should have gotten, you will not be penalized."

 

Otherwise, the rest of your post is also how I understand it.

 

Barb

[Robin in Tx]

Thanks, Barb, for pointing that out! I did not realize that's how they've structured it. That's good to know!

 

Robin

 

P.S. You're due in September? Did I miss an announcement? Congratulations!!

[Barb_]

Thank you! I'm about 8 weeks now and still in that twilight zone stage where I don't quite believe it. We're excited...my oldest is so happy she decided to go to school close by next year instead of heading back East.

 

Barb

[Robin in Tx]

Oh, that's wonderful... I'm so happy for you and your family. I'm happy that you're all there together now, too. Life is good!

 

Robin

[mbeaser]

Yes... and that's what it's intended to do. Inflation is the opposite of recession. The premise is that a little inflation is a good corrector to a recessionary period.

 

 

Robin

 

 

I'm going to respectfully disagree with the statement in bold. Recession has to do with GDP, gross domestic product. The economy itself is shrinking in a recession. Inflation deals with the actual supply of money. Inflation is when the govt prints more money (whether on paper or by adding 0s electronically). The dilution of the value of the money is what is often referred to as inflation (although it is the actual act of creating more money with no additional value). Inflation is more money chasing the same amount of goods that were already there, making the goods more expensive (you can see why this is when you look at the dollar index, it is currently at around .76, it was around .80 before the market tanked last fall and the Fed "injected" billions of dollars into "the system"-effectively creating more money-the USDX hadn't been below .80 in decades). In a recession, wages will not be able to grow because there isn't enough cash coming in to businesses. With inflation, goods cost more. We have a strong change of looking at more "stagflation", a recession and inflation at the same time (wages stagnate while prices rise). UGLY.

 

Missy (I heart Richard Maybury)

fka Missy in VA

[Robin in Tx]

You are correct, Missy, and absolutely right to point that out. I should not have flippantly over simplified it that way.

 

Inflation can be and is sometimes measured, in part, by GDP (delfator). What I was trying to say was that the policies/actions/remedies that recession and inflation call for are opposite from each other. (Although there isn't full agreement amongst economists about all of this, of course, this is just the theory). Government spending on the war is what increaed inflation and production which pulled us out of the Great Depression. Even though price ceilings were put into place to stop inflation, when the government quit spending after the war, we entered into a brief recession. Again, I'm oversimplifying...

 

Am I saying all this correctly? Maybe not... it's possible that I've misunderstood what I read. But the general gist is that what we do to put stimulate the economy out of a recession will be similar to the sort of thing we would do if we *wanted* a little inflation.

 

Thanks for pointing out that this all out, though... my post definitely was a little misleading.

 

Robin