So, about these economic stimulus rebate thingies...

[Ed_McCarron]

No, this isn't intended to go all PNR'y...

I read somewhere that this money gets treated as an advance rebate for the next tax year.

Does that mean if owed a refund next year, it will be LESS the rebate amount this year?

Taxes laugh at me.   

[ChadTower]

That would be the first I've heard of it that way.  It is supposed to be a refund of taxes paid, which means they're just giving us back some of what we've already given them.  Not an advance of next year's rebate. 

Unless of course they've done a bait and switch on us which would not surprise me.

Basically what we're doing now is borrowing $2 from our kids for every $1 they give us now.

[shardian]

It is officially "an advance on 2008 taxes". It will not cause an additional tax liability or anything like that - it is considered a gift and not taxable income. It is based on 2007 tax forms though.

[ChadTower]

Ah.  So now they're saying it "will be a refund of taxes paid by the date of the refund".

It's still a bad idea.

[shardian]

It's still a bad idea.

http://www.cnn.com/2008/US/02/12/beck.stimulus.package/index.html

Still just as pointless in the long run, but would have guaranteed pointless spending.

Bad idea or no, I will enjoy my $1500 check.

[mr.Curmudgeon]

How many of us are going to use our refunds to buy electronics manufactured in China anyhow, thus defeating the purpose of this economic morphine injection?
 

/raises hand
//buying Xbox360
///made in China

[ChadTower]

I will likely do one of these things with it:

1)  Put it straight in the bank like I did the last one.
2)  Send it to my mortgage principle.
3)  Put it towards a new furnace.

I do like this guy's indirect suggestion that we should all spend it on breast implants. 

[shardian]

It is going towards a beach vacation at the end of May.

Also note, that it is highly likely the IRS could issue your refund as direct deposit if that is how you get your refund anyways.

[saint]

How many of us are going to use our refunds to buy electronics manufactured in China anyhow, thus defeating the purpose of this economic morphine injection?
 

/raises hand
//buying Xbox360
///made in China

Booze, good food, fast women. The rest I'll probably just waste.

[Ed_McCarron]

Does that mean if owed a refund next year, it will be LESS the rebate amount this year?

This doesn't answer my "Ed doesn't really have a clue" question.  At least not in language I understand.

Say I was going to get $5000 back next year.  Does this mean I'll only get $3800?

WTF is an 'advance on 2008 taxes?'

[ChadTower]

It means you will get the same refund at the end of 2008 you would if this rebate did not happen.  It is not an advance on your future rebate.  It is an additional rebate of 2008 taxes.

[Ed_McCarron]

It means you will get the same refund at the end of 2008 you would if this rebate did not happen.  It is not an advance on your future rebate.  It is an additional rebate of 2008 taxes.

Ding!  Thanks.

Stupid government making tax stuff all complicated...

[mr.Curmudgeon]

This doesn't answer my "Ed doesn't really have a clue" question.  At least not in language I understand.

Stupid government making tax stuff all complicated...

Yeah, it's the government that's stupid!   

[Ed_McCarron]

Yeah, it's the government that's stupid!   

Taxes are my blind spot; for some reason I just can't follow the logic.  I gladly pay a guy $130 to do them for me.

Oh, and by the way folks, you saw it here first:  MrC admits the current government isn't stupid.  The world may well stop spinning on its axis.  Everyone hang on!

[SavannahLion]

You guys notice that $600 (or $1200 for married plus $300 per kid) is actually the maximum you'll get? There is a minimum of $300 when you have no tax liability.

I think the maximum earnings cap is $75,000 and the low earnings limit is $3,000. It seems to me if you're at the sweet spot of $75,000 after deductions, you'll get your maximum. Otherwise you'll get less either way. 

That's the way I'm interpreting the IRS page on this topic anyways.

[ChadTower]

I think the maximum earnings cap is $75,000 and the low earnings limit is $3,000. It seems to me if you're at the sweet spot of $75,000 after deductions, you'll get your maximum. Otherwise you'll get less either way. 

$150,000 for married filing jointly, which will be many of the people here.

[SavannahLion]

Does every married couple here earn the maximum $150,000 though?

That's the point I'm trying to make, if you don't earn the sweet spot of $75k or $150k, you're not getting the maximum $600/$1200.

The way I see it, no one is going to get enough money to actually spend it on anything interesting or useful. It's like those stupid gift cards people give you. People get a $20 gift card, but there's no way to ever actually spend just $20. Statistically speaking, people with gift cards tend to spend more money beyond the initial gift card than they would have if they didn't receive the gift card.

[whammoed]

That's the point I'm trying to make, if you don't earn the sweet spot of $75k or $150k, you're not getting the maximum $600/$1200.

It may very well be, but based on what I've read, I'm not convinced that $75k/$150k is the sweet spot.  The IRS page linked does not explain it fully.  They mention a sliding scale when going over $75k/$150k but don't go into the rising scale past $3k.  Perhaps the minimum to get the $600/$1200 is below the $75k/$150k mark, or maybe it has to do with how much in taxes you ended up paying in 2007.  There is information/speculation/calculators out there but they don't all agree.

[shardian]

The way I understood it, the sweet spot is having a tax liability higher than the $600/$1200, with out going over the 75k/150k single/joint limit. If you are over the 75k for singles, or 150k for joint filing, then you get a $50 deduction in rebate for every $1000 you are over the limit.

Read the following article. It is the best big picture summary I've seen.
http://finance.yahoo.com/taxes/article/104417/Tax-Rebate-Winners-and-Losers#3

[ChadTower]

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).

The payment, including the basic amount and the amount for qualifying children, will be reduced by 5 percent of the amount of income in excess of $75,000 for individuals and $150,000 for those with a Married Filing Jointly filing status.

If you owe more than $600 in taxes you get $600 back.  If you earn more than $75,000 AGI your rebate will be reduced by 5% of the difference betwen $75,000 and your AGI.

There just isn't a clearer way to say it.  SavannahLion is mistaken.

[SavannahLion]

There just isn't a clearer way to say it.  SavannahLion is mistaken.

I'm not the only one. Many of the news stations are giving the impression that everyone earning between X and Y is going to get the full amount. It's been the talk of the office for weeks, everyone is assuming we're all going to get the full $600/1200.

I still say it's a crock. The range of earnings seems to capture the largest group of people with the worst spending habits. And given that these people are unlikely to restrict themselves to spending just the $600 on whatever frivolous purchasing the government is aiming for, it's going to drive the immediate debt of the people even higher.

[ChadTower]

I'm not the only one. Many of the news stations are giving the impression that everyone earning between X and Y is going to get the full amount. It's been the talk of the office for weeks, everyone is assuming we're all going to get the full $600/1200.

Because you likely are.  If you make just about anything up to $75,000 you will get the full amount.  $600.  That is what it says.  A married couple making nearly zero up to $150,000 will get $1200.  It is not a graduating scale up to $600 and $1200.

[boykster]

It pains me to say this, but Chad is interpreting this correctly 

single income up to $75k = $600
single income between $75k and $87k = a pro-rated amount

married income up to $150k = $1200
married income between $150k and $174k = a pro-rated amount

the amount you get back is reduced by $50 for every $1000 you earn above the income limit.  And in all cases, "income" is your adjusted gross income

[AtomSmasher]

Does that $600 get included if you owe money this tax period?  Say I owe the government $1000 for taxes last year, does that mean I only have to pay $400, or do I pay the full $1000 and get $600 back later on?

[SavannahLion]

I'm not the only one. Many of the news stations are giving the impression that everyone earning between X and Y is going to get the full amount. It's been the talk of the office for weeks, everyone is assuming we're all going to get the full $600/1200.

Because you likely are.  If you make just about anything up to $75,000 you will get the full amount.  $600.  That is what it says.  A married couple making nearly zero up to $150,000 will get $1200.  It is not a graduating scale up to $600 and $1200.

Are you certain?

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).

Let's say your (I believe it states elsewhere this is net, not gross) tax liability ends up being $500, I'm interpreting this as you're only going to get $500, not $600. There is a note elsewhere that if the government gaffs and overpays, you're not required to pay it back. And if they underpay, they'll pay you the difference the following year.

[ChadTower]

There are other limits below which you don't get a rebate.  If you only owe $500 you may fall below that limit.  The limits are all stated in the article you quoted.  That lower limit is really low, though.  We're talking high school kid low.

[SavannahLion]

There are other limits below which you don't get a rebate.  If you only owe $500 you may fall below that limit.  The limits are all stated in the article you quoted.  That lower limit is really low, though.  We're talking high school kid low.

Like this?

Most workers will have a net tax liability well above $600, so they'll get the maximum individual rebate amount. But if your tax liability is less, then that will be the amount of your rebate check.

[boykster]

well, that's a change from the initial proposal; the initial version even people who paid ZERO tax would get the payment.....

[ChadTower]

Like this?

Yes.  Keep in mind that people who make under a certain limit have no tax liability.  That level of income is a part time service worker, though. 

boykster, it was like the third revision that gave ZERO liability people a payment.  It wasn't until the Democrats got their input.  Bush's initial version had much higher limits on who got it and who didn't.  The Democrats pushed to get it for everyone no matter what... the compromise was that exceptions were made for certain people like seniors.

[shardian]

The one thing I'm still not clear on is the $300 child tax credit. Assume the following example:

A married couple makes a combined $185000. That means they would not get the $1200 rebate. However, they have 4 kids. They still have a max. rebate of $1600, so would they still get the $300 per kid? That is not explained anywhere that I have researched.

[divemaster127]

The way Rush explained this & i talked to my cpa this is a advance on your 2008 taxes, meaning your refund will be reduced when you file next year.  Below is a artice I pasted from msn money please take a look & let me know if im wrong
dm

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.

Smart Spending blog: Rebate? Bonus? One is easier to spend

Remember, this is your money you're getting back, and the rebate checks are basically an advance on the credit you'd otherwise get in 2009.

If it turns out that you're entitled to a bigger tax credit than the checks you receive, you'll be able to claim that when you file your return next year. If you got too much, you won't have to pay back the excess.

But you'll have to account for any rebate checks you receive this year when you fill out next year's taxes. That doesn't mean you'll get less than what you would have if there were no tax credit and rebate check --- but accounting for the checks on your next return will ensure you don't get the tax credit twice.

Still, the rebate checks may cause confusion when people file next year's return. 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."

[shardian]

Wow, the more I understand, the more my head hurts.
Here is the 2008 excerpt from my link above:

What will the rebate mean to my 2008 taxes?
Will I owe taxes on my rebate amount next year? What if this year my situation changes and that means my rebate amount should be less?

For most filers, says Luscombe, this year's rebate will appear as a simple gift from the government. The rebate amounts are tax-free.

But filers will have to reconcile any money they receive this year when they file their 2008 returns.

"It harks back to the 2001 situation when we got the new 10 percent bracket and got an advance check for that. Then on next return had to account for it," says Luscombe. "It's expected to be that way this time."

The 2008 tax forms should have a line for the new credit. When calculating taxes next year, taxpayers will have to subtract what they got as a rebate check the previous summer.

"Some people might think that's unfair," says Luscombe, "but they got the money, and they got it early."

One thing taxpayers won't have to worry about is giving back any excess if their 2008 taxes show that the advance this year was actually more than they should have received.

"If it turns out that credit on your 2008 return is greater, you get to take that additional amount," says Luscombe. "If it's lesser than what you got in 2007, you don't have to refund that back to government." The law says the IRS can't recover the extra payment by reducing your 2008 refund or adding to your 2008 tax bill.

I've read that thru several times, and the more I read it the more I am confused.

The last line basically says the IRS won't reduce your refund, or make you pay them extra taxes if you aren't due a refund next year. All of the gobbldygook above it makes no sense to me whatsoever.

Subtract from what? Credit what? Huh? Who? When? Where?

It's a gift? But its my money? I have to claim it next year? How?

I get the feeling this whole bill is intentionally being left vague and won't be sorted out until after the elections in the fall. You know, that way the public won't be pissed until AFTER they've voted.

No matter what happens, I get the feeling that the working middle class is gonna end up as always with a sore cornhole once the dust settles.

[divemaster127]

I agree this whole rebate process is dirty, people are not going to realize how much this might bite them in the but until after the election is over

[ChadTower]

Subtract from what?

That article specifically doesn't say - a lot of people are using this in a lot of ways to confuse people and further their own little agendas.  Confused people are easy to scare.

It's a gift? But its my money? I have to claim it next year? How?

It is all your money.  Taxes are your money.  You can't claim it - a claim is something different.  You may have to declare it, though - just like you declare your state return from the previous year.  It may or may not actually affect anything, though.

I get the feeling this whole bill is intentionally being left vague and won't be sorted out until after the elections in the fall. You know, that way the public won't be pissed until AFTER they've voted.

There will be nothing vague about the bill.  There can't be - that is not how the law works.  What will be vague, and already is, is the eleventy points of view taken on it in the media.  No one goes to the IRS website (except perhaps SavannahLion).  Everyone goes to some newspaper or columnist, and of course, every article has some slant to do what I mentioned above.  Confusion and fear are the tools of the trade.

No matter what happens, I get the feeling that the working middle class is gonna end up as always with a sore cornhole once the dust settles.

They always do.

[shardian]

The IRS website does not have anything yet on how this will effect your 2008 return. They just say "Save so and so paper we send you".

[ChadTower]

The IRS website does not have anything yet on how this will effect your 2008 return. They just say "Save so and so paper we send you".

Why would it?  The laws have not been passed yet.  They can't officially publish the specifics until they are official.

[shardian]

Ahh, I think it just clicked with me.

Let's assume you joint income this year is 165,000. Your rebate will be pretty much wiped out. Now when you calc your 2008 return, your joint income is only $149,000. In this case, the gov't owes you some more rebate money and it will be added to your refund next year.

Assume the opposite is true and next year you make a killing. Technically, that would put you out of range for a refund. But since they already gave the money to you, you get to keep it.

[ChadTower]

Ahh, I think it just clicked with me.

That sounds mostly like what they've been saying... though, honestly, I don't care what happens to the people in that scenario.  I'm nowhere near that combined figure.

[mr.Curmudgeon]

Oh, and by the way folks, you saw it here first:  MrC admits the current government isn't stupid.  The world may well stop spinning on its axis.  Everyone hang on!

Well, I must be wrong. The world kept on turning. 

[Daniel270]

I'm sure Saint wouldn't mind if everyone who got one of these checks spends a small portion on a/another copy of his Arcade book