2009 Stimulus Tax Credit

[newspaper56]

It appears that the new stimulus bill just passed offers a tax credit of 400.00 geared toward individuals with
earned income or a onetime rebate check of 300.00 to retirees on SS. What about individuals who receive only unearned income and are not yet on SS. How does the tax credit work for this group of people?

 

[OAG]

I do not think it does; unless you go buy a car, go get and then lose a job. Well I take that back it will work but in the reverse as you will incur the liability for it but then everyone does.

 

[Bikerdude]

It appears that the new stimulus bill just passed offers a tax credit of 400.00 geared toward individuals with
earned income or a onetime rebate check of 300.00 to retirees on SS. What about individuals who receive only unearned income and are not yet on SS. How does the tax credit work for this group of people?

From what I could determine that group will get zero. I wrote my elected officials and asked them why. My income is well below the cutoff and I pay taxes unlike some of the SS beneficiaries. I really don't give a cr*p, I just like to jangle their cage a little.

 

[BLS53]

The way I understand it, the rebate will be applied to FICA taxes. If you're on a pension, paying income tax, but not FICA, you get nothing.

There's a one time $250 check for those receiving SS. I don't think federal, military, and other non-disability related government pensioners get anything.

I always question why military pensions are subject to federal tax, when many states exempt them. The small amount is insignificant to the government, but makes a difference to many of us retirees.

 

[youbet]

Sounds like if you're working but not part of SS, such as many teachers and other state, county and municipal employees, you'll also be omitted. Can't wait to hear the teachers unions respond to this!

 

[Bikerdude]

Sounds like if you're working but not part of SS, such as many teachers and other state, county and municipal employees, you'll also be omitted. Can't wait to hear the teachers unions respond to this!

From what I've seen as long as you have "earned income" you qualify. Not paying into SS has no effect from what I can see. State and federal employee's who took early retirement and do not work PT and are not on SS will not qualify, so that may cause a stir.

If you don't make enough to pay taxes but work, you will still receive a payment. If you are retired and on a government program you will receive a one time payment. If you provide your own support and are not on a government program you will receive nothing even if you pay taxes and are otherwise qualified by income.

 

[OAG]

Sounds like if you're working but not part of SS, such as many teachers and other state, county and municipal employees, you'll also be omitted. Can't wait to hear the teachers unions respond to this!

I do not work and all my income is "unearned" (Interest is "unearned" as are dividends and other forms of "passive income").

 

[Jeb-NY]

Only a little off topic: A day or so ago I heard a News Talking Head say to a Politician Talking Head, do you think $8/week extra in the pay check will really stimulate the economy. PTH corrects the NTH that it wasn't $8/week it was $800/couple/year. He said this to emphasizes how much bigger the number was.

I love it when I get to laugh out loud at hard news.

Jeb...

 

[Dog]

Will the credit be based on 2008 earnings?

 

[Bikerdude]

Will the credit be based on 2008 earnings?

It seems you will have to qualify in 2009 for a 2009 payment and again in 2010 for those who work. The "retiree" payment is one time for 2009.

 

[samclem]

According to an article in today's WSJ (pg A4), the Obama administration is trying to figure out the psychology of those who will receive the credit to help assure more people spend it. Planers believe if the money "trickles out" as a few dollars per month (via reduced tax withholding), people will likely spend the money, but if it is received as a lump sum, they'll waste it by paying off debt or putting it into savings. The tweaking, micro-gaming in Washington continues.

There is also considerable handwringing about the present (apparently excessive) personal savings rate, which was 3.6% in December 2008, up from 0.4% one year earlier.

Okay, so the administartion wants us to spend the money and create jobs. I understand the short term goal. But short-term thinking (by businesses, consumers, and govt) is what spawned our current situation. Is it realy so bad if the Smith's pay off some debt, or start a personal monthly savings plan with their money? Wouldn't increased savings/equity investment help with our other crisis: lack of business liquidity? Wouldn't we be better able, as a nation, to handle economic shocks in the future if families had a few thousand bucks in an emergency fund (so a short-term perturbation like rising gas prices or a small increase in unemployment are buffered, rather kicking off a domino pattern of asset selling, foreclosures, etc?) Most importantly--how about a mesage of self-reliance and taking personal responsibilty for your actions, rather than relying on the nebulous great collective? Obama could be the messenger of this--it would be seen as "more of the same" from a conservative, but as an important wake-up call from the new administraion, particularly if backed by concrete action.
Just as only the recognized stalwart anti-comminist Nixon could have openned the door to China, maybe only the recognized former "most liberal senator in the US" can deliver the shocking news to the dependent masses. "Hope" comes from within, and the only "change" you can count on are the ones you make yourself.

 

[ziggy29]

There is also considerable handwringing about the present (apparently excessive) personal savings rate, which was 3.6% in December 2008, up from 0.4% one year earlier.

Okay, so the administartion wants us to spend the money and create jobs. I understand the short term goal. But short-term thinking (by businesses, consumers, and govt) is what spawned our current situation. Is it realy so bad if the Smith's pay off some debt, or start a personal monthly savings plan with their money?

The problem isn't that people are becoming savers; long-term I think just about everyone sees that as a good thing. The problem, as some economists and politicians see it, is that the transition is occurring far too quickly and creating an economic shock. In other words, even though it seems like wishful thinking I suspect what is hoped for would have been a "soft landing" transition, a much more gradual one that didn't result in sudden and massive (in economic terms) decline in the velocity of money -- that the transition from borrowers to savers would come over several years, not months.

So in that sense, the trick is getting people to spend a little more (which requires, among other things, convincing consumers they aren't about to be unemployed -- good luck) without going whole-hog back to their old ways of profligate spending. To some degree, the elimination of widespread use of home as ATM card will prevent that, but not completely.

 

[ERD50]

... The tweaking, micro-gaming in Washington continues.

There is also considerable handwringing about the present (apparently excessive) personal savings rate, which was 3.6% in December 2008, up from 0.4% one year earlier.

... Is it really so bad if the Smith's pay off some debt, or start a personal monthly savings plan with their money? Wouldn't increased savings/equity investment help with our other crisis: lack of business liquidity? Wouldn't we be better able, as a nation, to handle economic shocks in the future if families had a few thousand bucks in an emergency fund (so a short-term perturbation like rising gas prices or a small increase in unemployment are buffered, rather kicking off a domino pattern of asset selling, foreclosures, etc?)

Most importantly--how about a message of self-reliance and taking personal responsibility for your actions,...

Obama could be the messenger of this---

Well said samclem.

What I see is, Obama has a unique, powerful, and much needed opportunity to live up to his campaign promises of "change", and deliver something positive to the public. Congress's approval rating is in the tank. Most of America (even those that did not vote for him), have a positive view on Obama.

I want to see the Obama that I got a snippet of from his campaign (when he spoke to the people about his Mom getting him up at 4:30AM to review his homework - the personal responsibility message). He can use his great communication skills to tell people the "tough love" story in a way that probably no other politician could. Instead of promising a "quick fix", tell people to save for a rainy day, explain that savings will provide liquidity for business, and we will slowly, surely come out of this.

I think he is throwing away this once-in-a-lifetime opportunity.

-ERD50

 

[samclem]

The problem, as some economists and politicians see it, is that the transition is occurring far too quickly and creating an economic shock. In other words, even though it seems like wishful thinking I suspect what is hoped for would have been a "soft landing" transition, a much more gradual one that didn't result in sudden and massive (in economic terms) decline in the velocity of money -- that the transition from borrowers to savers would come over several years, not months.

Yes, but:
1) The economy is not some type of rocket ship responsive to fine inputs that have calculable results.
2) People are not communal insects willing to sacrifice themselves to the collective.

If the above two statements were false, the USSR would still be around and we'd be in the dustbin of history.

And, if it is an "economic shock" that people are saving approx 4% of their income, then it's something to which the economy should react. Does anyone think 4% is realy excessive? If not, then encourage people to do it and let the system adjust to the new reality.

Economics" may be called the "dismal science", but I think it is more "dismal" than it is "science," which os why govt micro-tweaking is not effective. Let market force work this out.

I guess I'm ready to for government to stop trying to reduce the magnitude of the short-term pain by extending its duration. One lesson (controversial, but backed by some sound research) of the Great Depression is that government intervention (the New Deal) prolonged the pain and the severity.

We're pulling the Bandaid off 1 mm at a time.

 

[hankster]

According to an article in today's WSJ (pg A4), the Obama administration is trying to figure out the psychology of those who will receive the credit to help assure more people spend it. Planers believe if the money "trickles out" as a few dollars per month (via reduced tax withholding), people will likely spend the money, but if it is received as a lump sum, they'll waste it by paying off debt or putting it into savings. The tweaking, micro-gaming in Washington continues.

Maybe they could issue it in the form of a debit card that can't be used for cash. It's only good for purchases. A national "Shop 'til the balance is $0 day".

Of course this wouldn't prevent people from using it to buy essentials, then using their essentials money for savings or paying down debt.

 

[eridanus]

I want to see the Obama that I got a snippet of from his campaign (when he spoke to the people about his Mom getting him up at 4:30AM to review his homework - the personal responsibility message). He can use his great communication skills to tell people the "tough love" story in a way that probably no other politician could. Instead of promising a "quick fix", tell people to save for a rainy day, explain that savings will provide liquidity for business, and we will slowly, surely come out of this.

I think he is throwing away this once-in-a-lifetime opportunity.

-ERD50

Cold and can't afford the gas/oil bill? Put on a sweater.

Carter tried this during the 79 oil crisis. Let's face it -- even the so-called "self responsibility" cowboy crowd doesn't want to take responsibility for themselves.

 

[Gotadimple]

A national "Shop 'til the balance is $0 day".

Isn't that the same as the day before Christmas? With people grabbing anything because they have obligations?

Seems wasteful.

-- Rita

 

[ERD50]

Maybe they could issue it in the form of a debit card ...

Of course this wouldn't prevent people from using it to buy essentials, then using their essentials money for savings or paying down debt.

That is *exactly* the thought process I went through a few days ago when I was thinking about this.

Once again, you just can't account for the unintended consequences. If you create an *artificial* incentive, you get *artificial* results. Yet, Congress would take credit anyhow.

-ERD50

 

[ERD50]

Cold and can't afford the gas/oil bill? Put on a sweater.

Carter tried this during the 79 oil crisis. Let's face it -- even the so-called "self responsibility" cowboy crowd doesn't want to take responsibility for themselves.

Well, it's all in the delivery.

Not many would disagree that Obama is a more inspirational speaker than Carter.

-ERD50

 

[OAG]

"Talk the talk but Walk the walk?" comes to mind: heard the Oval Office is kept at 80 degrees; wish I could keep my home that warm.

 

[TromboneAl]

Maybe they could issue it in the form of a debit card that can't be used for cash. It's only good for purchases.

Or every person in America could get a $50 gift card for Bed, Bath, and Beyond.

 

[ziggy29]

Or every person in America could get a $50 gift card for Bed, Bath, and Beyond.

Linens 'n Things would be more appropriate, actually...

 

[JOHNNIE36]

Stimulus!! I for one need a detailed description of each and every stimulus. Example: Up to $15000 tax credit for "first time home buyers". What is a first time home buyer? Not exactly what it says. According to MONEY magazine, it's anyone that has not owned a home in the last three years. My divorcesd son, who is in the market for a home, has rented for the last five years. Apparently he would fall into that category and be elegible for the tax credit. Any ideas out there about this??

 

[homestead]

Stimulus!! I for one need a detailed description of each and every stimulus. Example: Up to $15000 tax credit for "first time home buyers". What is a first time home buyer? Not exactly what it says. According to MONEY magazine, it's anyone that has not owned a home in the last three years. My divorcesd son, who is in the market for a home, has rented for the last five years. Apparently he would fall into that category and be elegible for the tax credit. Any ideas out there about this??

Here are some answers on the Stimulus
Economic Stimulus 2009 - H&R Block Digits

 

[OAG]

Stimulus!! I for one need a detailed description of each and every stimulus. Example: Up to $15000 tax credit for "first time home buyers". What is a first time home buyer? Not exactly what it says. According to MONEY magazine, it's anyone that has not owned a home in the last three years. My divorcesd son, who is in the market for a home, has rented for the last five years. Apparently he would fall into that category and be elegible for the tax credit. Any ideas out there about this??

In this context "first time home buyer" is one that has not owned a home for 3 years - and the credit is now $8,000 in the final bill. Seems like your Son would qualify.