Senate Deal on Economic Stimulus Plan

[Helena]

Strange CNN News Edit Concerning Tax Rebate ??

This sentence was posted on a CNN news article today, then removed.

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.


Was the information wrong... or ??



Here are links to more info:

Strange CNN News Edit Concerning Tax Rebate ?? - MarketTicker Forums

Those Rebate Checks Are Really Just Advances On Future Refunds | KXNet.com North Dakota News

[Bikerdude]

Quote:

Originally Posted by Helena Strange CNN News Edit Concerning Tax Rebate ?? This sentence was posted on a CNN news article today, then removed. 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. Was the information wrong... or ??

The above statement is correct but also confusing. Next years refunds include a $600 "tax cut". This is for 2008 only. You will get the money this year and account for it next year. If anyone knows how to say it in simpler terms have at it.

[SecondCor521]

Quote:

Originally Posted by Sue J Does anyone have a link to the actual language of the bill that was passed? In this part - I'm wondering what comprises "earned income". My son had wages of $2450, where taxes were withheld and he was issued a W2. But he also had $750 paid by check but not as payroll, no taxes were withheld and he was not issued a 1099MISC, so the $750 will be shown on Line 21 - Miscellaneous Income. I'm trying to find out if the rebate comes from only wages or if the misc. income counts toward the $3000.

Sue, it looks to me like it is going to be based on 2007 AGI, which is the last number on the front page of his tax return, assuming he filed form 1040.

2Cor521

[Sue J]

Quote:

Originally Posted by SecondCor521 Sue, it looks to me like it is going to be based on 2007 AGI, which is the last number on the front page of his tax return, assuming he filed form 1040. 2Cor521

I'm hoping that's how it works. He'll pay a little tax, but be eligible for the rebate.

[TromboneAl]

So it means that in 2008, I can convert an additional $6,000 to a Roth IRA and pay no tax on it. That is, I will save $600. Yes?

[Bikerdude]

Quote:

Originally Posted by TromboneAl So it means that in 2008, I can convert an additional $6,000 to a Roth IRA and pay no tax on it. That is, I will save $600. Yes?

I guess you could look at it that way, however you only get the $600 once .

[Sue J]

If anyone else had the same question that I did -

Will a college age dependent who had an AGI of over $3000 get a rebate?

I found the answer here -
http://finance.yahoo.com/taxes/artic...ers-and-Losers

Quote:

The rebate bill specifically makes dependents, or even those who could be claimed as a dependent, ineligible for the rebate. So students who can be claimed by parents won't get rebates even if they held jobs outside class that otherwise would have qualified them for the money.

Darn, it would have been nice for him.

[A854321]

So does this mean the Duggar Family, with 19 (or is it now 20) kids will get $6300?

[Bikerdude]

Quote:

Originally Posted by A854321 So does this mean the Duggar Family, with 19 (or is it now 20) kids will get $6300?

"Taxpayers with children would receive an additional $300 per child, with no limit on the number of child-based rebates. That means a family with four children could enjoy up to $2,400, and a family with two kids could receive up to $1,800."

[OAG]

From the IRS who will be sending out the money: Information on Stimulus Packagel.

[bpp3]

Quote:

Originally Posted by Bikerdude However its not free. It will go on the deficit and be paid by your kids .

If I get a check, I am tempted to put it straight into an I Bond as a form of protest. Some day my kid can use it to pay back the increased tax caused by that part of the deficit represented by the check.

Of course if I were truly principled and unselfish, I would simply sign the check over to the Treasury as a gift to reduce the national debt.

[myself]

Quote:

Originally Posted by Bikerdude The above statement is correct but also confusing. Next years refunds include a $600 "tax cut". This is for 2008 only. You will get the money this year and account for it next year. If anyone knows how to say it in simpler terms have at it.

BikerDude, where's a link (from a reputable source, say the IRS) that specifically states the $600 will have to be accounted for next year.
My assumption (although it may be incorrect), is that you're saying we'll have to claim it as income next year. My belief (and I talked to a CPA ... whose been a CPA for 30+ years ... yesterday about this) is that the $600 will not be taxable in 2009 (for the 2008 tax year).
If this is not what you were inferring, please accept my most humble apologies in advance.

[myself]

Quote:

Originally Posted by Bikerdude "Taxpayers with children would receive an additional $300 per child, with no limit on the number of child-based rebates. That means a family with four children could enjoy up to $2,400, and a family with two kids could receive up to $1,800."

Wooohooo.
We're in the family with four children category. But we've spent it (as was requested ) on 3 new laptops from Best Buy. Granted, we'll be paying it off over the next 3 years most likely, because they had a 3 year no interest offer at the time. And the last time we replaced any computer equipment was 8 years ago.

[ExHermit]

You have to "account for" the rebate on your 2008 tax return only in the sense that you can't get both the rebate based on your 2007 return and a credit on your 2008 return. I posted some links to official sources on another thread.
http://www.early-retirement.org/foru...1&postcount=30

[bearkeley]

So now I am a little confused. If the rebate is actually an advance on the change in the tax rate on the first $6,000 earned why are they limiting it to tax payers who earn less than $75,000?

I would seem that everyone who makes more than $6,000 would be affected by that change. Does that simply mean the those who make over $75,000 will simply need to wait until next year? Or do they figure that most who make over $75 ,000 get wacked by the AMT any way so they wouldn't benefit from the rate reduction?

[jazz4cash]

Quote:

Originally Posted by bearkeley So now I am a little confused. If the rebate is actually an advance on the change in the tax rate on the first $6,000 earned why are they limiting it to tax payers who earn less than $75,000? I would seem that everyone who makes more than $6,000 would be affected by that change. Does that simply mean the those who make over $75,000 will simply need to wait until next year? Or do they figure that most who make over $75 ,000 get wacked by the AMT any way so they wouldn't benefit from the rate reduction?

I was also wondering about this. I think the logic is that if they send a prebate check to those above 75k single/150k married, it won't get spent to stimulate the economy. But those high income earners should still benefit as you indicated

[bearkeley]

Quote:

Originally Posted by jazz4cash I was also wondering about this. I think the logic is that if they send a prebate check to those above 75k single/150k married, it won't get spent to stimulate the economy. But those high income earners should still benefit as you indicated

So give me and Amazon.com gift card and I'll be sure to spend it on something made in the good old USA. Like 4 Penn Slammer reels I promise

[ExHermit]

The "rebate" does not result from any change in tax rates or brackets. It is a tax credit. The credit is reduced by 5 cents for every dollar of AGI above $75,000 for a single return ($150,000 on a joint return).

This is the same way some other credits, the Child Tax Credit for example, are structured. There is a fair amount of weirdness involved in getting checks mailed in 2007, even thought, strictly speaking, the credit applies to returns filed in 2008 based on 2007 income.

As to why it is done this way, the short answer is that is what could get a majority vote in the House, 60 votes in the Senate, and be signed by the President. Looking for logic beyond that is, IMHO, futile.

Whether this rebate is fair or wise might affect your votes in November, but it won't affect your taxes.

[JustCurious]

Quote:

Originally Posted by ExHermit There is a fair amount of weirdness involved in getting checks mailed in 2007, even thought, strictly speaking, the credit applies to returns filed in 2008 based on 2007 income.

This is not correct. The checks are being mailed in 2008, not 2007. Also, the credit will be applied to 2008 returns which will be filed in 2009, and the amount of your credit in 2009 will be reduced by the amount of your "prebate" mailed to you in 2008. On the other hand, if you got a higher rebate in 2008 than you will qualify for in 2009, based on your 2008 return, you get to keep the difference.

[ExHermit]

Yep. I was off a year. Checks in 2008 based on 2007 return. Credit technically based on 2008 income as shown on return filed in 2009.