Article about the tax rebate and misconceptions

I recall someone posting that the tax rebate will be deducted from next years return. That's not true.

Info is in the first paragraph

Re: Article about the tax rebate and misconceptions

Actually they don't really explain it in that article.

I found this on About.com:

Impact on 2008 Tax Returns: The stimulus rebates will be calculated by the IRS using information on the 2007 tax returns. If taxpayers were entitled to a larger rebate based on their 2008 income, those taxpayers will be able to claim a tax credit for the additional amount. Taxpayers won't have to pay back the rebate, however, if using their 2008 income would result in a lower rebate amount.

And this is from an article on Yahoo Finance from Bankrate.com

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.

Message edited 2/26/2008 9:46:50 PM.

Re: Article about the tax rebate and misconceptions

I'm still confused. So it's subtracted from the 2008 refund?

Re: Article about the tax rebate and misconceptions

Re: Article about the tax rebate and misconceptions

Re: Article about the tax rebate and misconceptions

at this article as it says nothing about what it wanted to address in its opening paragraph...

but after using my friend GOOGLE...
it seems like its not

Prehaps the early verison of this bill was suppose to be against your 2008 taxes..when it got to the senate, they made changes to it...

When in doubt for information, don't depend on third party souces...

Infomation from the good folks from the IRS...

FAQ

fACTS

MAIN PAGE


Orignal poster....please copy these links and post on your post...

Good night

Message edited 2/26/2008 11:23:55 PM.

Re: Article about the tax rebate and misconceptions

Thanks Tom. This is what i thought!

It's free money. Not taxed, does not count against future return.

Thanks for clearing it up.

Re: Article about the tax rebate and misconceptions

Re: Article about the tax rebate and misconceptions

Re: Article about the tax rebate and misconceptions

Thank you all for the clarification.. I have been searching for info on this!!

Re: Article about the tax rebate and misconceptions

My tax guy told me its going to be taxed like the last one.....as income. Just like we have to pay taxes on our state refund as income.

Re: Article about the tax rebate and misconceptions

Posted by GoldenRod

Posted by JenniferEver

Thanks Tom. This is what i thought!

It's free money. Not taxed, does not count against future return.

Thanks for clearing it up.

"Free" money just means we'll be taxed for it some other way....

At least it won't affect next year's returns.

Re: Article about the tax rebate and misconceptions

Re: Article about the tax rebate and misconceptions

From the IRS website:
Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?

A. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.

Q. Is my stimulus payment taxable?

A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. In the event you do not qualify for the full amount this year but you do next year, you will need to have the letter as a record of the amount you previously received.

http://www.irs.gov/newsroom/article/0,,id=179181,00.html

Re: Article about the tax rebate and misconceptions

I think someone here said it best that this tax cut was simply an advance on a tax cut that was going to take effect in 2008, which will now simply take into effect in 2009 instead.

So on the IRS website when they ask "Will my refund change" and "Will I pay tax" both answers are still NO in this scenario.

But even to this day I still don't know the real reason. All I care is that we are getting $1200 and $1200 is better than nothing.

Re: Article about the tax rebate and misconceptions

My tax accountant said it is not taken out of '09 refund and it isn't taxed either. Essentially it is "free" money.

Re: Article about the tax rebate and misconceptions

I think it would be better to invest the money in infrastructure and "green collar" jobs. no one is fixing the bridges and levees. No one is building windmills. Building would give many people jobs and improve the economy. let's face it, most people will use the money to buy imported electronics anyway.

I'm saving for a Japanese camera

Re: Article about the tax rebate and misconceptions

you have to report it on your 2008 tax return, but it will not effect you in any other way