Tax Rebate Checks... - What a ripoff!
Kentuckychick wrote: So yeah, everyone's been pretty excited about these refund checks ole GW is sending out but I've heard from three different people now and then my parents were told by the woman who does their taxes today that the money you get (unless you only fall into the $300 dollar bracket) will be taken out of your taxes next year!!!
Not only is this whole thing going to put our country even further into debt... but it's going to screw everyone up next year. I wish there was a way to turn it down!!!
sparkys2boys replied: Hmm, that does not seem right???
Maddie&EthansMom replied: Wow! I had no idea.
Kentuckychick replied:
I didn't either until they told me! I would hope it's wrong but it did seem too good to be true 
My3LilMonkeys replied: Taken directly from the IRS website:
Here is the link to the exact page it's on.
luvmykids replied:
I was just about to post this very same link 
For whatever reason there has been a lot of confustion over this but I've read more than once that it is NOT basically an "advance" of next years refund...it's a "bonus"; tax free and not to be repaid by deducting it from your refund next year.
Calimama replied: I've heard that too! But I'm glad it's wrong!
Kentuckychick replied:
Well if the people who DO the taxes are confused then it's no wonder!
It's good to know, but I still have to wonder though if they won't change it all when they see how much further into debt this puts the country.
My3LilMonkeys replied:
I don't see how they can, personally, after they said it's not taxable and all. but if anyone could do it, it would be our government! 
Kentuckychick replied:
Okay... I just asked them during dinner to clarify EXACTLY what their tax woman had said because I was confused and they said she showed them the letter that the IRS has apparently sent out to tax refund agencies (whatever you call them!) and it said that they should warn their customers that while it "has not yet been decided" it is highly likely that the refund checks will be deducted from next years taxes or included in next years income. To let customers know that it is "not a gift." 
She said the worst part of this will be for those in the middle bracket who will likely end up owing money next year if this is the case.
So apparently it's not yet been decided but is highly likely...
so yeah... sounds like we're all scizzoodooled!
My3LilMonkeys replied:
I could be totally wrong...I usually am  but IMO, if they still weren't sure they mostly likely wouldn't have an answer on their website that says no, it won't be deducted. Essentially to tell us it won't be deducted when it hasn't been decided yet is basically lying. And while I won't say our government doesn't lie to us, it's usually not quite so obvious about it. 
ETA: Personally, I wouldn't really mind if if it was included in the income - it's just deducting it from next year's refund that I don't like. An extra $1800 (what it is expected I would receive given that I'm married with 2 kids) isn't really going to affect my taxes by a huge amount, and technically it is income whether it's free or not. If they count money that's won in the lottery as income, why shouldn't they count this?
TANNER'S MOM replied: They are confused b/c they word it by saying, it is based on your 2008 estimated tax refund.
I work for an accounting firm. We have alot of people call in with these questions!
Kentuckychick replied:
I would have to think that if you don't mind it being included in your income then it's because you wouldn't be one of us so negatively effected by it next year. If in fact it is added to my income and my brothers then we will both end up owing money next year rather than getting a return.
Yes, "technically" it is income and yes, so is the lottery... however this is NOT something you can decline. You have no choice as to whether or not you accept it. That is what is so annoying.
And apparently this letter is very new -- sent within the last couple of weeks...
I know I will be highly annoyed if this messes up my taxes next year.
My3LilMonkeys replied:
If you're worried about it messing with your taxes, save it. Then at tax time next year, you'll have it available to cover any negative affects it may have.
punkeemunkee'smom replied: I think I would get a new CPA! 
Calimama replied: So is it taken out of our taxes next year or not?
Kentuckychick replied:
Apparently it's not just ours... I've heard this from several people who all heard it when they were getting their taxes done.
I guess we'll just have to wait and see...
My3LilMonkeys replied:
According to the IRS website, no. But, if what Rachel is being told is true...like she said, we'll just have to wait and see.
Sam & Abby's Mom replied: This is crazy because my sister and I have the same accountant and he told her that the bonus money given to us now will be deducted from the refund next year. Our accountant is very reputable and usually knows his stuff. 
Kentuckychick replied:
This is likely what I would do... but I would still be losing money.
Sure I'd have that money available to pay the negative (which would likely equal almost as much as the check)...
But I wouldn't be getting the refund that I normally would... So I'll still be out money.
ETA: I really do hope the IRS site is telling the truth but I won't believe it til I see it. I guess for people like myself who really depend on that refund... it's going to be painful if it turns out to be true.
luvmykids replied: My CPA told me it's not being taxed OR taken out of next years refund/added to what you may owe next year. I wasn't sure he had it right, so I went to the IRS site....I don't know, maybe it's just me, I tend to believe both him and the IRS.
luvmykids replied:
Actually, if you normally get a refund, this might just put you pretty close to zero. So no, you wouldn't get the refund, but if we kept with the scenario of saving it, you'd still have it (or most of it) then
And we actually try to aim for NOT getting the refund....I know, trust me, how much it can help but when it dawned on me that I was letting the government use my money for a year, interest free, it ticked me off and I'd rather have the extra money every month than do that We're in a different situation though, as business owners, it complicates things a little
Mommy2BAK replied: thats a scary thought.
lovemy2 replied: It is based on your 2007 income tax return - if you file your 2007 return and have it direct deposited then the refund will be direct deposited as well into the same account - there is a letter coming to citizens from the IRS - should be out in a week or so - it will explain it all there - as for the taxability of the refund - it is still up in the air how it will be treated next year - it could be taxable or it could be deducted from your refund - it all depends on the state of the economy at that point - don't count on it being a "free gift"
My3LilMonkeys replied:
I'm confused by this - and if you don't want to answer, that's fine. But I don't get how the rebate check could affect you for MORE than it's amount.
Say you are getting a $300 rebate check, and you normally get a $1000 refund, just as an example.
If they subtract it from next year's refund, you would still get a $700 refund, plus a $300 rebate check, = the exact same thing, just at different times.
If they include it in your income and call it taxable...well, even if you're in a 50% tax bracket (again, just an example), it would only add $150 (50% of $300) to your taxes that need to be paid. So you'd still get a $850 refund, plus a $300 check, = more money than you started out with.
I agree 100% it will really suck if they take it out of next year's refund, but I don't see it as losing money - just getting it early. Maybe I'm misunderstanding though.
lovemy2 replied:
You are correct - it isn't being taxed per say or taken out of next years refund if they decide to do it one of those two ways - it is more or less an ADVANCE on next years refund if you get one - it is based on what you earned this year - so another words you can't get more than the amount of tax you owed - however - if you do not owe tax or do not usually file you still can get $300 for an individual or $600 for married filing joint...and if you earn too much you won't be entitled to one - it phases out for income over $75,000 for single and I think its like $150,000 for married filing joint - here is the basics from the IRS website - our tax program here is now printing a paragraph on our transmittal letters that go with client's tax returns estimating how much they can expect back based on their 2007 return. So a) make sure you file ON TIME this year if you want your rebate and  make sure that wherever you are direct depositing your refund - if you do and if you get one - is where you want your rebate to go as well - ie: I have clients who direct deposit their refunds into an IRA - that is also where their rebate will go and there is little or no way to change it once its filed.
"The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment. 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).
Even those who have little or no tax liability may qualify for a minimum payment of $300 ($600 if filing a joint return) if their tax return reflects $3,000 or more in qualifying income. For the purpose of the stimulus payments, qualifying income consists of earned income such as wages and net self-employment income as well as Social Security or certain Railroad Retirement benefits and veterans’ disability compensation, pension or survivors’ benefits received from the Department of Veterans Affairs in 2007. However, Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.
Low-income workers who have earned income above $3,000 but do not have a regular filing requirement must file a 2007 tax return to receive the minimum stimulus payment. Similarly, Social Security recipients, certain Railroad retirees, and those who receive the veterans’ benefits mentioned above must file a 2007 return in order to notify the IRS of their qualifying income.
The IRS emphasized that people with no filing requirement who turn in a tax return to qualify for the economic stimulus payment will not get a tax bill. People in this category will not owe money because of the stimulus payment.
Additional Payments for Parents and Others with Qualifying Children
Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number."
lisar replied:
yea thats what I thought to.
Kentuckychick replied:
I'm not absolutely sure... this was all coming from our CPA.
The problem is something with I will be in another tax bracket next year or something of that nature. I'm not sure because I was confused too, but she was saying that for people in my position I would end up owing money next year rather than recieving any.
And it also probably depends on exactly what they decide to do with it. Whether or not they will add it to income, tax it, or reduce the return.
coasterqueen replied: It's not free, I can tell you that. Advance of 2008 is how I've heard it will be.
5littleladies replied: I have done a lot of researching on this because of this thread and from what I can tell this is what's up. The stimulus package is creating a one-time tax credit which would technically be applied to next years tax returns. However they are speeding up the process in order to give us this credit now to "help" the economy. If they didn't give us this credit now people would receive a larger refund next year but instead it will be paid out now. So technically, yes, it will decrease next years refund, but not in the way people would think. It shouldn't affect what you would normally recieve-Just what you would have received with this temporary tax credit added. And this is a credit-People who normally pay in will not have to pay in extra due to this.
*Disclaimer*!!!! This is just how I understand it to be, I could be totally wrong. I hope not because that would suck. 
jcc64 replied: Am I the only person in America wondering where exactly is all of this $$$ coming from?
5littleladies replied:
Well it's coming out of thin air naturally!
coasterqueen replied:
No. It's an advance on next year. Where does any of the money come from? Tax paying citizens
lovemy2 replied:
Your credit cards - the ones you AREN"T supposed to pay off using this money - don't fool yourselves into thinking this is all "free" in some way shape or form it WILL affect taxes next year - 
jcc64 replied:
Trust me, I know where it's coming from- and I find it insulting that Bush and his buds think we are stupid enough to believe it IS free $$$. I heard Ted Koppel talking about the fact that we're actually BORROWING the money from the Chinese to finance the stimulus package.
Talk about irony.
Boo&BugsMom replied:
But if it's an "advance" isn't that the same thing as it getting taken out of next years refund?
bawoodsmall replied: I am so glad I am dense about this. My brain hurts trying to figure it out so I will just deal with the fact that whatever happens...happens. GB certainly doesnt care about me.
Boo&BugsMom replied:
That's kind of how I'm thinking. I'm going to live in ignorant bliss!!!
holley79 replied:
I was just fixing to post that.
My2Beauties replied:
I was about to post this, this was in another discussion on another thread too.
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