Discussion:Dumb question - these tax rebates coming are NOT going to be taxable, right?

"IRS explains myths and facts about economic stimulus rebate payments Amidst ongoing confusion about the impending tax rebate payments, the IRS has provided this list of myths vs. facts to help clear up questions and protect taxpayers from becoming victims of scams: MYTH – The Stimulus Payment will reduce a taxpayer's 2008 refund. FACT – The payment will NOT reduce refunds or increase the amount owed when a 2008 return is filed..."

Again, the IRS is NOT telling the whole story.

How about the old lady I filed a return for who only has Social Security and hasn't filed in 20 years? I of course filed for her to get her her $300. She going to have to pay that back?

I am bemused. Besides Lavla, can anyone direct me anywhere that explains exactly how the rebate affects my clients' 2008 tax returns?

It's pretty much the same as 2001. We had lots of problems then with people swearing up and down that they didn't get the money and later getting a letter from the IRS adjusting their refund or turning the refund into a "you owe". Somehow that was our fault.

Yes, that IS a dumb question. No Federal tax refunds, payments or witholding is EVER subject to taxation or deduction [as is the case with state refunds, payments and withholding].

If, based on their income, an individual is scheduled to get a $1,200 refund this year. Next year their income and deductions are the same they will get a refund of $2,400 - $1,200 for the advanced refund they were to receive for a net of $1,200.

Is this not correct?

Dusty

come on, folks, why is this so difficult to understand?

Next thing someone will tell us it's an advance on the tax law changes coming in 2011. Geez.

Tom

Kevinh5- I understand your explanation, you are right, it is not that difficult.

http://www.irs.gov/irs/article/0,,id=177937,00.html

www.irs.gov/pub/irs-utl/economic_stimulus_payment_notice.pdf

if you don't get one this year, you get it as a refundable credit on next year's return.

end of story, no?

Will

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.

Then the following is correct:

If, based on their income, an individual is scheduled to get a $1,200 refund this year. Next year their income and deductions are the same they will get a refund of $2,400 - $1,200 for the advanced refund they received for a net of $1,200.

What is incorrect about what I just posted?

Dusty

Thanks, Here would be an updated example.

2007 refund $1,875

2007 Advance Stimulus Rebate amount $1,200 (MFJ with total tax of $5,000 - not self employed - no children)

2008 Income, deductions the same as 2007. Their refund would be:

Overpayment of $1,875

Eligible for $1,200 of Stimulus Rebate

Total of $3,075.

Received the Advance Stimulus Rebate of $1,200

Actual refund for 2008 $1,875.

Does that make more sense?

Thanks,

Dusty

Thanks, I thought I understood it until I read some of the posts in this thread.

Dusty

i think we're way overanalyzing this rebate check.

it's just like the $300 rebate from a few years ago. if you didn't get it for some reason then the taxpayer received it as a refundable credit on the next year's tax return. it's really that simple.

the confusion arose when someone who already got the $300 also claimed the $300 on the next year's tax return, and vice versa someone who didn't get the check then subsequently forgot to take the credit on the next year's return.

Will

Good work . . .

The check is in the mail. If the Last 2 digits of your SSN are 00 - 09 Receive your check by week of July 23 10 - 19 July 30 20 - 29 August 6 30 - 39 August 13 40 - 49 August 20 50 - 59 August 27 60 - 69 Sept. 3 70 - 79 Sept. 10 80 - 89 Sept. 17 90 - 99 Sept. 24 For married taxpayers who filed a joint return, the first Social Security Number on the return determines the mailing date.Source: Internal Revenue Service