Are the rebate checks rebates? Or just loans from the govt?

[Little-Acorn]

" 'Curiouser and curiouser', said Alice." - from "Alice in Wonderland"

Well, apparently CNN put an article on their website today about the newly-passed-and-signed-into-law Economic Stimulus Package of 2008, which will send checks of $600 or $1200 to most households this summer. And it contained a statement saying, "The checks are an advance on next year's refunds, and most, if not all of the money, will be deducted from taxpayers' refunds in 12 months' time."

Readers were surprised, to say the least. But when they went back to check on the article a short time later, that sentence had been removed, though the rest of the article still remains. The article (without that intriguing sentence) can be seen at http://www.cnn.com/2008/POLITICS/02/08/economic.stimulus/index.html . Better look fast, in case CNN decides to remove the entire article next.

That sentence made it sound like if you got a $600 check this year, you would merely owe $600 more in taxes next year. Its fast removal, has made some people think it was a mistake, that in fact this is a true tax cut you don't have to pay back. Maybe the CNN reporter just goofed, okay?

Well, not so fast. Let's just have a look at the actual legislation.

The bill that was passed in Congress and signed today by President Bush, can be found at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h5140enr.txt.pdf .

Near the bottom of the first page, it says:


SEC. 101. 2008 RECOVERY REBATES FOR INDIVIDUALS.

(a) IN GENERAL.—Section 6428 of the Internal Revenue Code
of 1986 is amended to read as follows:

‘‘SEC. 6428. 2008 RECOVERY REBATES FOR INDIVIDUALS.

‘‘(a) IN GENERAL.—In the case of an eligible individual, there
shall be allowed as a credit against the tax imposed by subtitle
A for the first taxable year beginning in 2008 an amount equal
to the lesser of—

‘‘(1) net income tax liability, or
‘‘(2) $600 ($1,200 in the case of a joint return)."

Elsewhere in the same bill, it is referred to as an "advance credit" and an "advance refund".

Sure sounds to me like the legislators are basically "giving" us $600 (or $1200) from the refund that we would have gotten from next year's taxes anyway... and reducing next year's refund by that amount. From this, I would guess that people who weren't getting a refund on their 2008 1040 form, will now find themselves paying $600 (or $1200) more, after getting this "rebate" this year.

Did the CNN reporter inadvertently let the cat out of the bag... and then get his hand severely slapped by the Powers That Be???

This should make for some interesting news shows tonight.

[Little-Acorn]

Looks like MSN Money agrees: The rebates are just a loan you have to pay back next year.

-----------------------------------------

http://articles.moneycentral.msn.com/Taxes/Advice/TheDetailsOnTaxRebates.aspx?page=1

America, don't blow this rebate

Congress wraps up the details: $300 for retirees, $600 for most individuals and $1,200 for most couples. But wait, there's more: It's not really free money.
by Liz Pulliam Weston

Some Americans are getting awfully excited about the prospect of spending their own money.

The $168 billion economic stimulus package just passed by Congress will ship checks of up to $600 for individuals and $1,200 for couples starting in May. Most households will get these checks, although individuals with adjusted gross incomes of more than $75,000 and couples making more than $150,000 will see less or nothing at all.

Additionally, families will get $300 per child.

The biggest change since the original proposal: Those who paid no income taxes will get $300 as long as they earned at least $3,000, including veterans disability or Social Security benefits.

An estimated 130 million taxpayers will share the rebate money.

Here's what you need to keep in mind while you're waiting:

This isn't free money -- for most people
To produce this cash, Congress created a one-time tax credit to reduce taxable income for most taxpayers this year.

Normally, you wouldn’t see that cash until the spring of 2009, when you filed your 2008 return. But Congress wants to speed that money to you now, so checks will start going out in May.

Remember, this is your money you're getting back, and the rebate checks are basically an advance on your 2009 refund. When similar rebates were sent out in 2001, said tax expert Mark Luscombe, "a lot of people were upset to see their (next) refund reduced."

The only people for whom this really is free money are low-income folks (those who earn at least the minimum $3,000 required to trigger the checks or who receive at least $3,000 in Social Security or veterans benefits) who won't end up owing any taxes for 2008. If that's your situation, or you somehow wind up with a check when you technically shouldn't have -- you earned income in 2007 but won't in 2008, for example -- you won't have to pay back the money, said Luscombe, a principal analyst for tax research firm CCH.

[typomaniac]

You forgot to blame the Democrats/liberals for all this. You're slipping, Little Nut. :no:

[Hobbit]

So not only is this wonderful 'stimulus' package just a way of giving us our own money, we then have to pay it back after a year? What the hell kind of plan is that? We're being fast talked by the very people who are supposed to be our servants.

Edit: That's because it's not just the "Democrats/liberals" who are at fault. It's every slimebag weasel who voted for this thing in the first place. Who wrote it, by the way? I'm going to have to send him a flaming bag of dog crap.

[Little-Acorn]

You're slipping, Little Nut.

One of us is.:poke:

.

[manu1959]

tax refunds have always been income.....

[Little-Acorn]

tax refunds have always been income.....

Yup. But it sounds like this one isn't... cuz you have to hand the WHOLE thing to the government next year, not just 15% of it like you would an ordinary refund (or whatever tax bracket you're in).

[JohnDoe]

it is a rebate, that HAS TO BE PAID BACK.... is how it sounds to me and this is exactly what the 300/$600 rebate we got the first year president Bush was in office was....a rebate that had to be paid back when filing your 2001 income taxes.

But, if this is the case, why is this "costing" tax payer's $150 billion or more? It's a little confusing....won't this $150 billion be collected back when we all file our taxes for 2008?

jd

[PostmodernProphet]

I'm sorry, but this is a bogus claim.....this is a new tax credit, one that didn't exist before....therefore it is NOT simply an advance payment of a refund that you would have gotten anyway.....it may be that we are getting this new tax credit now instead of waiting until 09, but it is NOT something we were going to get in 09 anyway.....

[Little-Acorn]

I'm sorry, but this is a bogus claim.....this is a new tax credit, one that didn't exist before....therefore it is NOT simply an advance payment of a refund that you would have gotten anyway.....it may be that we are getting this new tax credit now instead of waiting until 09, but it is NOT something we were going to get in 09 anyway.....

And the reasons you think so are.......??

.

[Immanuel]

A tax credit means a reduction in your taxes similar to the child tax credit that many of us receive. So if this is a tax credit for the 2008 income tax year then your total tax liability for that year will be less by the amount of these checks. If it were simply an early payment on your refund, then it would reduce your refund by that amount and consequently you would have to pay back any refund you were not entitled to.

The way that I read this is that this was set up as a one time tax credit. Which means that your tax liability is reduced for the year. In other words, like the child tax credit, you will determine your tax liability, say it is $3,500 and you and your spouse received the pre-payment of the credit of $1,200 and received the additional $300 for your one child totaling $1,500 in pre-payments of the TAX CREDIT, you would owe taxes of $2,000 less your Federal withholding taxes for the year. Have more than $2,000 withheld from your check and the government sends you the over-payment. Have less and you send them the difference just like every other year.

Remember that the liberals tried to tell you when the first tax cuts of GWB's tenure were made that you had to pay it all back the following year. If I remember correctly, you did not have to pay it back as your taxes were reduced by the tax cuts.

{edit}

Oh, yeah, I forgot to mention... who is paying for this Economic Stimulus Package? Why your great grandchildren of course. Mail them a thank you card the day you receive your check.

Immie

[PostmodernProphet]

And the reasons you think so are.......??

????....I read the act....it's quoted above...

"there shall be allowed as a credit against the tax imposed by subtitle
A for the first taxable year beginning in 2008 an amount equal to the lesser of....."

this is not a credit that existed in 2007, therefore, if the act had not been passed, you would not have gotten it......thus, this isn't an advance payment of something you would have gotten anyway......

[PostmodernProphet]

Remember that the liberals tried to tell you when the first tax cuts of GWB's tenure were made that you had to pay it all back the following year. If I remember correctly, you did not have to pay it back as your taxes were reduced by the tax cuts.

actually, with the first tax rebate, when the Dems added the rebate for people who were not paying taxes, it WAS actually an advance on the earned income credit they were entitled to the following year and no new credit was added....thus for those who were the poorest, it was simply an advance payment, not a rebate.....

[JohnDoe]

hmmmmm, i seem to remember, that the 2001 rebate was part of the new tax cut structure....lowering the tax rate to 10% for the first few thousand from 15%,, and it was an ADVANCE on that new tax structure for those working...so when i filed my taxes, the rebate that matt and i got the previous august/september, was recalculated in to my figures....in other words, if i had not gotten the rebate check, matt and i would have gotten $600 more back in a refund, than what we did.

in this case, it is confusing....if it was not a tax ''rebate'', then why wouldn't a check just be sent to every citizen living here, to stimulate the economy?

and calling it a credit vs a rebate, makes it appear to be just a gift horse....????

i dunno?

jd

[5stringJeff]

In that case, I'll just stick my $2100 in the bank, pay it back when I file taxes next year, and take the $40-$50 interest I will have earned by then. Wow, guys, what a stimulus... :rolleyes:

[PostmodernProphet]

hmmmmm, i seem to remember, that the 2001 rebate was part of the new tax cut structure....lowering the tax rate to 10% for the first few thousand from 15%,, and it was an ADVANCE on that new tax structure for those working...so when i filed my taxes, the rebate that matt and i got the previous august/september, was recalculated in to my figures....in other words, if i had not gotten the rebate check, matt and i would have gotten $600 more back in a refund, than what we did.


in 2001 you got a check, which was the early distribution of a new tax cut you had become entitled to based upon a calculation of taxes due.....BUT.....when the Dems realized that people who weren't paying taxes weren't getting checks, they passed an amendment which provided everyone got checks....however, in the case of those who weren't getting a tax cut under the act (i.e. they didn't owe taxes) it was an advance payment of the EIC check they would have received under the old tax law....since the EIC was not increased, the check they got the next tax year was reduced by the amount of the check they got early......

[JohnDoe]

in 2001 you got a check, which was the early distribution of a new tax cut you had become entitled to based upon a calculation of taxes due.....BUT.....when the Dems realized that people who weren't paying taxes weren't getting checks, they passed an amendment which provided everyone got checks....however, in the case of those who weren't getting a tax cut under the act (i.e. they didn't owe taxes) it was an advance payment of the EIC check they would have received under the old tax law....since the EIC was not increased, the check they got the next tax year was reduced by the amount of the check they got early......

gotcha! yes, senator snow from maine insisted on that also, for the poor.

the $1200 tax rebate for us, will just go towards the $1800 due at the time on my property taxes.... :( it won't help the economy!

[red states rule]

gotcha! yes, senator snow from maine insisted on that also, for the poor.

the $1200 tax rebate for us, will just go towards the $1800 due at the time on my property taxes.... :( it won't help the economy!

Hey JD, what is the problem? You are paynig your "fair share", and being a liberal - you should send the money back to the government. They can spend it much more efficiently then you can.

At least that is what libs tell me

[JohnDoe]

Hey JD, what is the problem? You are paynig your "fair share", and being a liberal - you should send the money back to the government. They can spend it much more efficiently then you can.

At least that is what libs tell meThere is no problem! I am taking that federal tax rebate and gonna pay most of my Property tax bill due with it, and if this rebate did not come in to fruition i would have to hit my savings in order to pay it....

so, i am a happy camper! :)

i don't believe there is one dem that believes the federal gvt can spend their tax money better than they can.

What moderate Dems believe is that there are SOME, but limited things that our gvt can do for us that could fall under bettering our welfare that would be more efficient than each individual trying to do "it" on their own, or than if there were no one single private entity to do it for everyone like our postal service as an example, though that was already delegated to them constitutionally.

There are certainly liberals far to the left that seem to favor a nanny state, as there are conservatives that would prefer an authoritarian state or military state that are on the far right, i am NOT denying such exists, ok? :)

jd

[red states rule]

There is no problem! I am taking that federal tax rebate and gonna pay most of my Property tax bill due with it, and if this rebate did not come in to fruition i would have to hit my savings in order to pay it....

so, i am a happy camper! :)

i don't believe there is one dem that believes the federal gvt can spend their tax money better than they can.

What moderate Dems believe is that there are SOME, but limited things that our gvt can do for us that could fall under bettering our welfare that would be more efficient than each individual trying to do "it" on their own, or than if there were no one single private entity to do it for everyone like our postal service as an example, though that was already delegated to them constitutionally.

There are certainly liberals far to the left that seem to favor a nanny state, as there are conservatives that would prefer an authoritarian state or military state that are on the far right, i am NOT denying such exists, ok? :)

jd

Well I am happy you are happy JD. If the Dems get total control, be prepared to empty your savings - your taxes will go throuth the roof

Hillary and Obama are both for a nanny state - and they intend for you (and me) to pay for it

I have heard many Dems say the government is better at spending people money better. They feel only the government can accomplish certain things - not the private sector

[Immanuel]

gotcha! yes, senator snow from maine insisted on that also, for the poor.

the $1200 tax rebate for us, will just go towards the $1800 due at the time on my property taxes.... :( it won't help the economy!

It won't help? Put it this way, if it is going to your property taxes, then if you did not get the $1,200 from the stimulus package you would be paying for your property taxes out of either your savings or on credit. Now with the stimulus package you have $1,200 that you would not have had to pay those taxes.

Immie

[JohnDoe]

It won't help? Put it this way, if it is going to your property taxes, then if you did not get the $1,200 from the stimulus package you would be paying for your property taxes out of either your savings or on credit. Now with the stimulus package you have $1,200 that you would not have had to pay those taxes.

Immie

Ahemmmmm, that's exactly what i said in post 19 Immie!!!!:slap: lol


There is no problem! I am taking that federal tax rebate and gonna pay most of my Property tax bill due with it, and if this rebate did not come in to fruition i would have to hit my savings in order to pay it....!
so, i am a happy camper!


i said mine won't help the "economy", the "free market", mine is going right back in to the gvt's hands only this time it is the State/local government's hands via my property tax they will collect!

[Psychoblues]

Loans, just like the faux tax cuts for most of us in the first faux tax cut initiated by the shrub.

[red states rule]

Loans, just like the faux tax cuts for most of us in the first faux tax cut initiated by the shrub.

Considering the tax cuts have increased revenues to the government by causing economic growth - I understand why libs are against more tax cuts

Libs need and want a bad economy for their election talking points

[Psychoblues]

So the trillions in foreign debt to support an economy that cannot hold it's own while pretending to be somehow in growth mode at the same time as being in complete virtual financial default is attractive to you?



Considering the tax cuts have increased revenues to the government by causing economic growth - I understand why libs are against more tax cuts

Libs need and want a bad economy for their election talking points

Libs live in the real world, rsr. How's your Enron stocks doing?

[red states rule]

So the trillions in foreign debt to support an economy that cannot hold it's own while pretending to be somehow in growth mode at the same time as being in complete virtual financial default is attractive to you?




Libs live in the real world, rsr. How's your Enron stocks doing?

Libs live in the Twilight Zone. They think tax cuts are obscene, but have no issue with taking 33% (or more) of a person's paycheck

The Bush tax cuts have caused the revenue to the government to soar to record highs - yet it is not enough money for them

Dems have openly proposed a $1 trillion Social Secuirty tax increase - which will criopple workers and the companies they work for

Meanwhile, Charlie Rangel wants another $1 trillion tax increase

The top 50% of wage earners pay 97% of Federal Income taxes - they cant pay much more PB

[Psychoblues]

So you approve the Chinese financing our economy and you promise to pay in full with interest? You are so freakin' eat up with the neocon utopianisms that I don't think any education will ever correct your mindset!!!!!!!!!!!

[red states rule]

So you approve the Chinese financing our economy and you promise to pay in full with interest? You are so freakin' eat up with the neocon utopianisms that I don't think any education will ever correct your mindset!!!!!!!!!!!

Nice ducking from the facts about taxes I posted. Libs do have a severe reaction to facts and do not like reading or hearing them

[typomaniac]

Nice sucking from the facts about taxes I posted. Libs do have a severe reaction to facts and do not like reading or hearing them

No facts; just unsubstantiated bullshit. Your stock in trade.

[pegwinn]

Just one more reason to support HR25 (http://www.fairtax.org/)and to pressure your elected reps of both parties TO GET IT OUT OF COMMITTEE and into the process.

[red states rule]

Just one more reason to support HR25 (http://www.fairtax.org/)and to pressure your elected reps of both parties TO GET IT OUT OF COMMITTEE and into the process.

With Dems running things, the only thing we can depend on is even higher taxes for the producers

[pegwinn]

With Dems running things, the only thing we can depend on is even higher taxes for the producers

Likely true. But, you can forge Gabby's name and send hate mail to the dems on the Ways and Means Committee. :)

[avatar4321]

you mean loans from China...

[red states rule]

Likely true. But, you can forge Gabby's name and send hate mail to the dems on the Ways and Means Committee. :)

and Dems will increase the amount of "refunds" to people who do not pay income taxes - while raising the tax on people who do

[Trigg]

I've been wondering all along whether this is just an advance on our 2008 taxes. In which case I'm going to save it since my refund next year will be less. This is an article from the IRS regarding the rebate.

Does the bolded part mean that it's just a loan????????? Or are they going to count it as income next year?????????


http://www.irs.gov/newsroom/article/0,,id=179095,00.html



Most taxpayers will receive two notices from the IRS. The first general notice from the IRS will explain the stimulus payment program. The second notice will confirm the recipients’ eligibility, the payment amount and the approximate time table for the payment. Taxpayers will need to save this notice to assist them when they prepare their 2008 tax return next year.

The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will equal the amount of tax liability on the return with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return) and a minimum of $300 for individuals ($600 for taxpayers who file a joint return).

Even those who have little or no tax liability may qualify for a minimum payment of $300 ($600 if filing a joint return) if their tax return reflects $3,000 or more in qualifying income. For the purpose of the stimulus payments, qualifying income consists of earned income such as wages and net self-employment income as well as Social Security or certain Railroad Retirement benefits and veterans’ disability compensation, pension or survivors’ benefits received from the Department of Veterans Affairs in 2007. However, Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.

Low-income workers who have earned income above $3,000 but do not have a regular filing requirement must file a 2007 tax return to receive the minimum stimulus payment. Similarly, Social Security recipients, certain Railroad retirees, and those who receive the veterans’ benefits mentioned above must file a 2007 return in order to notify the IRS of their qualifying income.

The IRS emphasized that people with no filing requirement who turn in a tax return to qualify for the economic stimulus payment will not get a tax bill. People in this category will not owe money because of the stimulus payment.

Additional Payments for Parents and Others with Qualifying Children

Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security Number.

[red states rule]

Seems like another transfer of wealth. If you earn to much, you do not get a check period.

If you make to little - you get a bonus

[5stringJeff]

I've been wondering all along whether this is just an advance on our 2008 taxes. In which case I'm going to save it since my refund next year will be less. This is an article from the IRS regarding the rebate.

Does the bolded part mean that it's just a loan????????? Or are they going to count it as income next year?????????


http://www.irs.gov/newsroom/article/0,,id=179095,00.html

I read in the Wall Street Journal a coupe of days ago that, contrary to what I had thought, this is NOT an advance on our 2008 returns.

[red states rule]

I read in the Wall Street Journal a coupe of days ago that, contrary to what I had thought, this is NOT an advance on our 2008 returns.

But the checks should come with a message "This money courtesy
of the top earners and producers, who are not getting a check"

[retiredman]

But the checks should come with a message "This money courtesy
of the top earners and producers, who are not getting a check"

and won't even miss it!

[pegwinn]

I read in the Wall Street Journal a coupe of days ago that, contrary to what I had thought, this is NOT an advance on our 2008 returns.

If it is like the last one, we will have to declare it on the 2008 returns. It really ticks me off that I will get a check (I assume) that is essentially my money in the form of taxes paid in. But it will be classed as income.

Go for the Fairtax. End the income tax insanity.

[5stringJeff]

and won't even miss it!

I'd miss $2,100 if I earned $150,000.

[retiredman]

I'd miss $2,100 if I earned $150,000.

I thought the max was $1200 for a married couple. And its not like you were planning on it anyway... it is money you are NOT getting that you weren't expecting.

[5stringJeff]

I thought the max was $1200 for a married couple. And its not like you were planning on it anyway... it is money you are NOT getting that you weren't expecting.

$1200 for a married couple, plus three kids (my situation) equals $2100. And I see your point about not receiving money you didn't expect to get... except that upper income people both earn and spend money, so it makes no sense to leave them out.

[red states rule]

and won't even miss it!

Liberal arrogance once again raises it's ugly head. MM the liberal will decide who can afford it and who can't. Who will miss it and who won't

Libs like MM sit atop their ivory tower and look down on the rest of us, and they will decide and pass judgement on who "deserves" tax cuts