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This isn't income for 2008/09
I think that saying "the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income." leaves people with the idea that this is just an advance refund and will mean less of a refund that they would have gotten otherwise in 2009. This is free money that you wouldn't have gotten otherwise. A better way to say it is that it is a new tax credit which you are getting now and will be reflected on your 2008 return (i.e., it will show as a credit on your 2008 return, but then will be balanced by the payment that the Government has already made, for a net of $0)
Not that I didn't intend to put whatever rebate I get (and I'll believe it when I see it) into savings anyhow...but it would be good to know if we get to keep it or if we have to hand it back over a year from now.
Personally, I think I'd rather just pay my taxes, keep the government functioning on track, and not get jacked around.
The will be tax credits on your 2008 return that should offset the rebate you receive in May. The net effect on your 2008 return "should be" zero.
In other words, if they were not issuing a rebate in May. The credit would lower your 2008 tax liability on your 2008 return - either producing a lower amount due to the IRS or a higher refund. The rebate is just an advance payment of that credit.
I agree, keep things simple. If they want to give a credit they should just wait until you file your return to give it to you. I wonder what the administrative cost is to run this "rebate" program at the IRS instead of just letting it happen naturally on tax returns.
I would rather have a permanent tax reduction then this temporary relief. It does nothing but fuel a person's material dependency and greed that will leave a hole in your soul in the coming months.
Does anyone know what the best investment would be with the tax relief?
This year I only owe about $1600 in taxes.
What happens next year if I also only owe $1600? they gave me an $1800 advance- Will I need to pay back $200?
Is it going to come in the mail or do I need to request it. This is kind of hard to believe that the IRS is just going to give us ALL checks. Like the other girl said, I will believe it when I see it.
Seriously, does anyone know how you get it. Do I have to go to a professional to get the money back?
HELP
As an example, in 2007 I was a full time student who was claimed as a dependent on my parents taxes (which disqualifies me from receiving the credit based on 2007 tax filings). If during 2008 my status changes so I am no longer a dependent, then when I file my 2008 taxes (in March 2009) I can claim a credit equal to the stimulus money ($600 or $300 depending on income).
Here is another example. I file my 2007 taxes jointly with my wife and had less than $150,000 in income but more than $3,000. Based on our 2007 tax filings we will receive a check for $1,200 from the IRS as our stimulus money. During the year 2008 our gross income is again within the limits and my wife gives birth to a baby (so we now have one dependent). We can now claim a $300 tax credit on our 2008 taxes because we now have a dependent.
As a final example, consider that in 2007 you file as a single filer and had income of $60,000. You qualify for $600 in stimulus money that will arrive from the IRS as a check in summer 2008. During 2008 you change jobs and get a large raise so you make $100,000 in 2008 and again file as a single person. You now technically exceed the income limit for the stimulus money, but because the government was nice you do not have to pay any of the $600 back. You simply file as normal and ignore that you even got that stimulus money.
On the flip side of this situation, if you had only $1,000 of income in 2007 but had $3,001 in 2008 you could claim a $300 credit on your 2008 taxes. In other words, if you qualify in either year you get the money (all that changes is if you get it this summer or when you file your 2008 taxes) and if you qualified in one year but not the other the IRS does not require you to pay any of it back and nothing bad happens tax wise.
I hope this explanation helps those who are confused.
1. This stimulus is not a "rebate" by definition. It is an advance. I've heard it will be considered income and taxable at the appropriate taxable percentage (Say %15).
2. It is an advance that will require 100% payback in 2008 taxes.
3. It is a "rebate" you are not expect to pay back.
I personally qualify for $2100.00 "rebate" and have no desire to receive this money if it's nothing more than a one year interest free loan I will be expected to return in April of 09!
Looking forward to hearing specifics. I find it tough to believe it a "Rebate" by definition.
That said, this 'rebate'/stimulus check shouldn't reduce any potential refund I'd get next year, correct? If anything, it would increase same via a change in status (i.e a child born in 2008).
For example, this year let's say I'm expecting a $2,700 refund. If nothing changed, this was 2009 and I'd ordinarily get another $2,700 refund for my 1040 (i.e. for income earned in 2008), would this then be reduced to $1,200 because of this year's $1,500 check?
In 2009 your refund you would be $2500 thanks to the new law. Your original $1000 plus the new $1200 for you and your spouse and the $300 for your child.
Instead of the government making you wait till you file your 2009 return, they are advancing you the $1500 of that 2009 refund in May of 2008.
So when you file your 2009 taxes you will still get your original $1000 back.
Now if you have a child this year, you will add another dependant to your 2009 taxes. This will get you another $300 in your refund in 2009. Since you already received a check for all of your dependants on the forms you filled out in 2008.
So in 2008 you have 3 dependants = $1500
In 2009 you have 4 dependants = $1800
You already received $1500, so you get to claim the difference $300. Your $1000 refund will now jump to $1300.
To make it simple for math, let's say one of your dependants dies and you can't claim them in 2009 return. You don't have to give back the advance you received in May. The government lets you keep the extra money.
Suppose Tax Table says the Tax is $900.
With 2 children the "Child Tax Credit" offset is $2000, which brings the Tax Due to $0. The "Additional Child Tax Credit" amount is $1,200 but is applied after the "Tax Due" is figured along with $95 already withheld for a total refund of $1295. The "Child Tax Credit" is figured under "Taxes and Credits" while the "Additional Child Tax Credit" is figured under "Payments".
1. Is the new Credit going to be figured off of the "Tax" amount before other credits to determine eligibility.
2. Is the new Credit going to be applied before or after the "Total Tax" (example. 2007 1040 line 63) total is figured.
Knowing "where" this knew "Credit" will be applied on the 2008 Tax forms will help us know what to expect.
kimm: If you receive child support, it will not be considered when determining your earned income for the purpose of the calculator.
We are a family of 3, married filing jointly, with 1 child. WE recieved a refund of around $1500 this year, for the 2007 tax refund.
So, in May we will get $1500 (according to what are income is in 2007 adn having a child)
So when we file our taxes in early 2009 for the 2008 tax season, then there will be a line for the tax stimulus package. IF we get a check in May (or there abouts) then in 2009 when we file our 2008 returns, we will still get our regular $1500 (or so give or take) refund in 2009??? (unless of course we add a new tax credit by having a child or buying a home in 2008, in which case we get more in our returns) . So, they are basically spliting up our tax returns for the 2008 tax year, and sending us the extra now, and then our regular refund in early 2009? Am i understanding this correctly. So, we will get a refund in 2009, and the "rebate" we get in May will not be subtracted from our normal refund we would be intitled to in 2009, due to over withholding from our paychecks? Correct??
Just found new info on IRS website with examples. Finally.
The eligibility is figured on Tax liability BEFORE the Child Tax Credit is applied.
Still don't know if the New Rebate Credit shows up as a positive number, on the final 2008 returns, figured under the Payments section or if it is figured under Credits and Taxes, like the Child Tax Credit, to achieve a not less than 0 Tax Amount.
My husband receives Social Security disability benefits (NOT SSI). Because these are not taxable they are not reported on our tax returns so will this income be included in the calculation for the rebate?
My question is, would I qualify for the rebate or the new credit in 2009 ( for 2008 tax year) ??
Instead of getting $3000 next year, you will get $1500 of it in May and your regular $1500 next year.
I live in my own apartment, pay my own rent and utlities... Yet I don't qualify as an independant because I am under the age of 25 and am in college.
Not only that, I will have to suffer the hike in taxes next year to pay for this crap.
Must be nice adults. I guess I am back to my $8 an hour job to take-from-the-poor and give-to-the-rich.
Thank you
http://www.irs.gov/newsroom/article/0,,id=17918...
Go to the very bottom of the page, and see the 4th from the last question and answer:
if i get back 1500.00 back from taxes in 2008 from 2007
next year in 2009 i will get back say 300.00?
if I get a check for 1200.00 this may
everbody is saying it is not free money that the goverment is giving us
thanks
Ok. I see that. But will the tax rebates be sort of built into the 2008 1040 Income Tax Table? Ex. the 2007 tax table for Taxable Income of $89,000 Married Filing Jointly has tax owed of $15,104. All things being equal in 2009 when filing 2008 taxes would that same $89,000 have taxes owed of $16,304?
In your example in your first paragraph, that's only true if the "$1,500" you get back next year takes the $1,200 credit into account. If that's the case, then you won't receive the $1,200 you already received as an advance, you'd get a refund of $300 (not $200). But this also means that without the stimulus credit, you would have only received a $300 refund anyway. So your "real" tax stays the same in 2008.
Thanks for your help!
Thanks...
Which is correct? Thanks!
I worked full-time in 2007 so I know I'll qualify for $900 (dependent). My question is in my 2008 return. I'm not working this year (I only did for the first part of January). I'm going to college full time. I'm also having a baby this year. If I was working full-time this year, I understand that I'd probably get another $300 for the child I'll be having this year, but how does this affect me since I'm not working this year?
Nancy: The government will use the payment to cover any back taxes owe, it depends with child support and student loans. If you filed jointly, the payment in the form of one check or direct deposit will go to the primary (first) SSN on the 1040.
Kelly: If you don't qualify this year, next year's tax return (filed in 2009 for 2008 income) will have the credit as a line on the form. You'll get another chance to qualify.
Congress authorized a new credit which will appear on your 2008 income tax form (which you file in April 2009). This is the new tax credit described. (The EITC would be an example of an "old" credit and is unrelated to this topic.)
Congress has also authorized a special PRE-PAYMENT (a check to you from the government) outside of the tax return filing process with an estimation of what you'd probably receive for this new credit, but based on your 2007 income instead of 2008 income. This is the payment you will receive in the next month or so if you qualify, regardless of whether you owed taxes when filing your 2007 return or qualified for a refund.
When you fill out next year's taxes, you will see a line for the credit. But you already received the payment in advance. So you will not claim the credit next year, nor will you "owe it back" to the government. If you qualify for a *larger* credit at that time (because it'll be based on 2008 income rather than 2007 income), you will receive the difference.
If this isn't clear, seek a tax professional.
if someone earned income (say, $15k) from self employment, and would have owed a couple grand in self-employment taxes, but those taxes were offset by the EIC, thereby causing the person to receive a tax refund (even though they never actually PAID any tax because it was offset by the EIC which actually resulted in the person receiving a refund) is that person still eligible for the stimulus payment? they did in fact earn more than 3k in income, but didn't end up paying any taxes due to the EIC. and if they WILL receive a stimulus payment, will they receive the additional amounts for their children as well?
thanks so much.
Consider this your $1200 welfare check.
Apparently a key tax planning issue for some is to make sure they have at least $3000 in qualified income in 2008 (if they did not in 2007).
My situation may be true of many. Retired (hence no earned income). Had been debating whether to start social security payments or wait to full retirement age (have other funds to live on). In 2007 I received no social security and it is too late to change this. If I start social security now I can receive over $3000 in 2008. Since I have dependent children (young wife) it appears we could receive $1200 for children and $600 for us. If correct, this becomes a big incentive to start social security now (which means a lower annual payments in future years).
Is my understanding correct?
I can imagine similar situations for others who did not receive full benefits based on 2007 income, such as someone who can take a short term job for extra income, (or someone with a small business whose earning are near $3000 per year) who may want to manage things to have over $3000 in qualified income in 2008 (delaying expenses, taking income a bit earlier, etc.).
Since your can social security checks before full retirement age (65 to 66) and then repay the money and start at full retirement age, it appears many who have stopped working after 62 should be sure to get social security checks in 2008, even if they will later repay them so their future checks will be larger.
If I understand correctly, how come these strategies are not being more widely discussed?
which would make my income tax return just like normal...
Yes, the government did a poor job of enacting this credit in a way most people would understand. But it is a simple concept. You can't receive the credit twice.
But if you are getting a refund you will get less than expected because you have already gotten it months ago.
Seems a little unfair to me
Andrea: You're probably right. I know I tried to get out the word that the economic stimulus payment was just an *advance* on a new tax credit, but the government didn't do a good job of communicating and explaining to the public. In all, over the course of the last year and tax returns filed this year, the payment was above and beyond normal taxes, but it doesn't appear that way to many people.
The company I worked for closed and so I had to do just any work I could find.
However I still didn't net enough money in 2007 to qualify for a stimulus check.
If I do find that I net enough wjen I file my 2008 return, will I receive the stimulus check offered for the 2007 return?
If so, will it be as a refund on my 2008 return?
Or will I not receive anything at all?.
I am confused.
It turns out that the "rebate" was merely an interest free loan. A $600 rebate results in having to pay an additional $600 in taxes this year unless you earn more than $75K.
Ed. note: This comment is incorrect.
Ed. note: This comment is incorrect.
Entering $900 as your stimulus payment in the form will result in your supposed refund dropping $900. Until you enter $900 on that line in Turbo Tax, the software assumes you didn't receive a stimulus payment, which according to your note, you did. Ignore Turbo Tax's calculations until you are done entering everything on your tax form.
Methinks you are entering the amount of your stimulus on the line that ask for how much the Recovery Rebate credit is, and reducing it as a payment already made to you.
And we all know how much trouble our new Treasury Secretary almost got into for using Turbo Tax.
I'd rather spend the extra money and make sure it's right.
For example I got 698 but the calculator says I should have received 900. 600 for me and 300 for my daughter. I did not receive the 202 dollar difference with my regular tax refund. When would I receive it?
- Tax software included the stimulus rebate as INCOME which it should not be doing, this should have been fixed in many of these applications. If you are noticing that the tax rebate is lowering your tax return, then you should look for an updated application or file your taxes using the IRS tax form.
- As stated above, do not include the stimulus rebate from last year as INCOME! If you follow the 1040 closely, you will notice that if you do NOT include the stimulus from last year as income that there is no place for the stimulus to lower your return. On the line pertaining to the Recovery Rebate Credit, follow the RRC worksheet in order to determine the amount to list. The chances are that if you received the rebate last year that you will enter a 0 on this line.
- It pays to consult with a professional tax advisor/preparer because of situations like this. The IRS has rejected over 15% of returns because of these errors.
- The stimulus was an advance of the RRC that is offerred on this year's tax form. It does not need to be paid back and is not a government scheme to rob the American people. Before jumping to conclusions get the correct information.
As part of the 95% of Americans who will see their taxes reduced and thanks to the largesse of ReidBamaLosi, I am ecstatic to report that I now have $22 more each month than I have had before. What should I do first? Pay down my mortgage? Take that dream trip to New Zealand? Fund my grandkids’ college? What else can I do with this windfall of 73 cents per day? Should I start socking it away right now to start funding the future tax increases that are inevitable? That would be the patriotic thing to do, right?
For these golden opportunities, I say thank you, Jesus! No, wait, can’t say that, no reference to religion or God, bad, bad to do that. So whom do I thank? Oh yeah, forgot, thank you to my Big Brother, my Government, who now has an endless supply of funds to support me and all of my fellow citizens, and not-so citizens, for the rest of our lives. An endless supply of money just like the loaves and fishes – no, wait, there I go again with another reference to something, shudder, religious. Thank you, China! Your altruistic generosity is inspiring knowing that you expect nothing in return. Thank you to my dear grandchildren who now have the privilege of paying for this – in more ways than one - for the rest of their lives.
thanks,
Peg