UPDATE: Stimulus Checks Will Not Cut Into Your Rebate
Those $600 rebate checks about to spew forth from the Treasury as part of a $168 billion economic stimulus plan are an advance on a 2008 tax credit. We explain how this works after the jump.
Who Is Eligible?
Anyone who files a 2007 tax return with an adjusted gross income between $3,000 and $87,000. The limits are twice as high for couples filing jointly. Since the rebate is tied to your tax return, your rebate will be delayed if you file for an extension, so get your documents in order by April 15.
How Much Is The Rebate Worth?
The rebate is initially worth $300, but rises to match the tax you owe up to $600. Couples filing jointly get twice as much, up to $1,200. The rebate’s value decreases by $50 for every $1,000 earned above $75,000.
What Exactly Is Being Rebated?
Congress implemented a one-time tax cut for income earned in 2008. Rather than delay the benefit of that cut until you file your tax returns in 2009, Congress is giving you the money now.
What Happens If I’m Not Eligible This Year?
If you don’t qualify now (either your AGI is below $3,000 or above $87,000,) but do qualify next year, you can still claim the credit when you file your returns for 2008. If you qualify this year, but not next year, congratulations, you win, enjoy your free money.
Great! What Should I Do With My Rebate?
The government wants you to immediately inject your rebate into the economy by buying all those delicious consumables we love to write about. Saving or paying back student loans is not what they have in mind.
How Will the Economic Stimulus Tax Rebate Affect 2008 Tax Returns? [Consumerism Commentary]
(Photo: EricGjerde)
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This happened to me the last time they did the rebate. I didn’t qualify initially because I had been a dependant the previous tax cycle, but I was out of college that entire year so I got the rebate on my tax return the next year.
This post has done nothing to clear things up. Now you have people thinking this will come off next year’s REFUND, which of course isn’t the case.
Try again please.
@icedcornholio: Thank you for clearing things up. Consumerist should replace its long, convoluted post with your simple explanation.
No frivolous spending here…it will go to debt reduction.
So if I put mine in my Health Savings Account, would that be something like “investing” (actually paying less tax?) I get money back this year and can then deduct it next year from my income? It would go back into the economy eventually through medical costs. Yeah, this should be a fun tax year!
@ophmarketing: And you’ve been wrong all along. And Carey is wrong as well in her explanation. It is indeed new money; that’s why it will add billions more to the federal deficit.
The only “advance” part of it is that the rebate (NOT refund) comes off next year’s taxes, but you get the cash this year.
I’m probably going to get my truck repainted. I’d planned on doing it anyway. The 600 crows will be the deposit on the job.
while this whole thing is a stupid move by the government, I just cant say ‘no’ to free money.
@chilled: Yeah, it isn’t written so well, I had to read it a couple of times to understand it… but that’s taxes for you.
Me, I’m getting $2100. $1K for baby’s 529 and the rest in emergency fund. Wife’s student loan is 0% interest, so no hurry in paying that off.
I’m donating it to Obama’s campaign.
And mine will go towards paying back my student loans. Screw what they have in mind.
I’ll buy a new Evil Black Rifle and a 40 oz malt liquor.
this will make my truck loan 2 months shorter.
woo.
My husband and I have no debt (except student loans) so this will go into our already large savings. We’ll probably use it for our trip to Albania this summer. Oops, guess we’re not helping ‘stimulate’ our economy!
I’m spending mine in Amsterdam. I know, I’m a prick.
@DROPBEARCHARLIE: LMAO! I’m going to swim with Mushu the pygmy killer whale with my tricky dick fun bill. (“Barf, Mushu! Barf like a Freshman!”)
Sorry, had a Futurama flashback.
So, it’s not an actual tax cut, like the $300 we got a few years ago? It’s just an advance on the taxes we were going to pay anyway? That’s even more reason to use it to pay down debt or put in the bank. The government’s going to get it back sooner or later.
Sooooo next year, my refund will be less the amount they are sending me this year? Basically it is sort of like a government loan that I pay off with my 2008 tax refund? Meaning…if I usually get back $300 each year, next year I will get back $0?
Sorry Government, I have all the stuff I want. See ya at the bank.
My wife is going on a “girlcation” with my sister for a few days with her half, and I’m using my half (and the remains from our Federal tax rebate after I pay off my credit card) to insulate and finish our attic, and maybe buy new front door too (Hello energy credit!).
Sorry, Federal Gov’t., but I will be paying down debt with mine.
The rebate will partially pay for new pipes in my house. I’m a bit tired of rust chunks clogging the hot water lines and low water pressure. It will get spent, just not the way the govt. would like.
I’ll spend it in Canada, where a dollar is actually worth something.
So, I’m moving to a new residence next week.
How do I ensure I get my check at my new residence?
Oops.. hit enter too fast…
I’ve already done my 2007 taxes, which I already got my refund.
I’ll be putting my rebate check in the same savings account I put the 2007 federal and state tax refunds.
I’ll be one of the few that actually puts it away in savings and doesn’t spend it right away.
There goes their entire plan.
Paying off debt. It’s what we would have done if we’d gotten the money a year from now. Being debt-free will do more to help our household economy than any efforts on the part of the government.
@youbastid: Thanks for that explanation… The way I had it in my mind didn’t make any sense whatsoever, so this way it kinda’ does…
What would I do if I had $600? I reckon I’d do two girls at the same time….
@ HUMPHRMI – hence the word “refund”.
Try… hence the word “tax credit advance”.
You can get an advance from the bank or a check cashing place. Do you have to pay those back? Yes you do. Pay attention. People will owe money on this next year as it is borrowed money.
@hi: No, it isn’t.
You can’t draw a parallel to a bank or check cashing place because it isn’t the same thing at all. Just because both might use the word advance doesn’t mean they are the same kind of advance.
This is an advance on a credit that you would take when you file in 2008. I’m not paying anything back or losing anything with it. Its win win. If you don’t qualify in 2008 you still get the money in 2007 don’t have to “pay it back” in 2008. If you qualify for more in 2008 you’ll actually get the additional money.
I was thinking HDTV for mine too.
I went and looked the other day though and couldn’t really find one that had everything I wanted that was a name I’d trust. We’ll see what they’ve got to offer in May.
Straight in the bank. With the economy in the shit I need an emergency fund like never before.
@ladydisdain: NICE!
No soul-eating Tax Cat photo for this entry?
I don’t think that they’re going to like that my rebate will be going towards my credit card.
@Tande
It goes into the national debt which we all are paying back with our income taxes. All U.S. dollars are borrowed from the federal reserve with interest. And yes you and everyone else will be paying it back… it’s what we live for apparently.
Donate it to the ACLU, Cato Institute, Ron Paul or maybe the EFF… such delicious irony.
Hoe stroll here I come. Better not see you nekkid on rebate day!
Not clear why people would be surprised that it’s just an advance. The last time they did this, it was the same thing.
500 cups of coffee!
I am trying to find out if I need to pay taxes this year on the rebate check we received last year. I did not find it here, but I found another site that talks about it, so I thought I could share it here for others. This site http://www.maxi-pedia.com/how+to+tax+economic+stimulus+rebate+check that I have in my other window which says no. The article behind the link says that no need to tax it, that the rebate which we received last year was only an advance of a tax credit that we calculate on this years tax return.