PSA: tax rebate

ibbunee77

please read this.

http://www.consumerismcommentary.com/2008/02/08/how-will-the-economic-stimulus-tax-rebate-affect-2008-tax-returns/

hopefully it will clear up some confusion/misconceptions about the tax rebate. it is an advance on a CREDIT that you will receive on your 2008 tax return. it really is "extra" money. but instead of giving it to you next year, they are estimating (based on 2007 tax return) what your credit would be for 2008 and giving it to you in advance.

ibbunee77

oh and the goods news for those of us currently pregnant: you won't get the $300 rebate for the child this year, since they're estimating based off of your 2007 return, BUT you will get the money next year when you file your 2008 taxes.

ibbunee77

and here's another article that gives it to you pretty cut and dry:

http://money.cnn.com/2008/02/08/pf/taxes/rebates_what_you_need_to_know/index.htm?cnn=yes

jannypie

I'm sorry, I'm reading this and it still sounds like it's coming out of my refund from next year?

Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.

It's based on your 2007 income initially. If it turns out that your 2008 income and number of children would have qualified you for a larger rebate than the one you received, you'll be sent the difference. If it turns out your 2008 income was lower than in 2007 and you should have gotten a lower rebate, you get to keep the difference.

So isn't that still saying that of my refund from next year, it's deducting it out and if my refund is more then we'll get the difference? Am I not understanding it right?

jannypie

Unless its saying, for example every year I get back say $2000 in refund money. Next year I'll get back my normal $2000 + $1200 rebate money? so $3200 total? Except that I'm getting the $1200 this summer and not next April. 
Or that I'm getting $1200 from my return next year in advance and next year I'll only get back $800?

kristylynn

Credit and Refund aren't the same thing, right?  So Jan if you look at your Tax Refund (which it sounds like you get one every year and I am a little jealous because I OWE this year) as what it is, a REFUND, then the Tax Credit is different and separate from that. 

ibbunee77

Jan - if you got $2k back on your 2007 return, and all things staying equal (income/deductions/etc), you will still get $2k back on your 2008. whatever rebate you get from this economic stimulus package is an advance on a extra credit they apply towards 2008 taxes. it's just accounting. the govt needs to put the money in the books somewhere. they can't just say the $600 pp came out of nowhere. so essentially it's a tax break for 2008 that they are giving you now

jannypie

Okay, I see that now. Boy that's confusing! And that news article on NCB is very misleading!

jannypie

Dr. Raabe from OSU needs to stop spreading panic!

Dr. Bill Raabe, of The Ohio State University's Fisher College of Business, explained the rebate money would be a pre-payment on the withholding taxes taken from your paychecks. It's like claiming an extra tax exemption to make your paycheck bigger, but your refund becomes smaller or you owe more money during tax time.

^from the NBC4 link

ibbunee77

hmm. that nbci article was from over a week ago. perhaps outdated info?

charlatti

Since it's not a direct quote, I would guess it's just as likely to be NBC's fault for misunderstanding what Raabe said. Thanks for clearing it up, ibbunee!

YourSong

This just doesn't seem like a bright idea to me...  I wish I could say why, but I just can't put my finger on it.  Guess I'm the dumb one to look a gift horse in the mouth

brainstorm102

Thanks for posting this Hannah! It was a relief for us.