Discussion:Dumb question - these tax rebates coming are NOT going to be taxable, right?
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| Revision as of 15:07, 5 March 2008 Jefflief (Talk | contribs) (VERY DUMB QUESTION) ← Previous diff |
Revision as of 15:32, 5 March 2008 Dusty (Talk | contribs) (Ok, I read what) Next diff → |
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| 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].}} | 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].}} | ||
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| + | {{ForumReplyPost|UserID=Dusty|Date=5 March 2008|Text=Ok, I read what Bottom Line wrote and it is not what I understand. Please, someone help me out here. | ||
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| + | 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. | ||
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| + | Is this not correct? | ||
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| + | Dusty}} | ||
Revision as of 15:32, 5 March 2008
Discussion Forum Index --> Basic Tax Questions --> Dumb question - these tax rebates coming are NOT going to be taxable, right?
Discussion Forum Index --> Tax Questions --> Dumb question - these tax rebates coming are NOT going to be taxable, right?
| 4 March 2008 | |
| People keep asking me, and though I am sure they are not, just wanted to make sure. Thanks. | |
| 4 March 2008 | |
| As I understand the rebate it is an advance of the tax refund taxpayers expect in 2008. Therefore there should be no tax on it. | |
Bottom Line (talk|edits) said: | 4 March 2008 |
| No, it is not taxable BUT it will reduce next year's refund or make them owe more. I'm warning all mine that I've seen and will see this tax season. I'm also telling them that they will be getting a letter from the IRS in the mail in the next couple of weeks (that way my phone will ring less from panicked people). Had one say "I don't want the money if I have to give it back. Can I just send the check back?" I reminded them that this is the government we're dealing with and they wouldn't know how to handle it. Client said he would put it in the savings account so it would be available to send back this time next year. | |
| 4 March 2008 | |
| This is an excerpt from the IRS:
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| 4 March 2008 | |
| we've already discussed that that particular IRS statement IS NOT TRUE, Lavla. If they don't get the prebate/refund this year, they will receive a credit on their 2008 return, therefore, the 'prebate' could indeed reduce the amount of refund they would get on their 2008 return.
Again, the IRS is NOT telling the whole story. | |
Bottom Line (talk|edits) said: | 4 March 2008 |
I guess the IRS clearing up a myth, is a myth 
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| 5 March 2008 | |
| Oh! I should start reading more TAXALMANAC and less the IRS website ;-) | |
| 5 March 2008 | |
| its governments doublespeak - it will not change their 2008 tax liability, is what the IRS should say - using anticipated withholdings or planned quarterly estimates, it may change the amount the taxpayer would expect to owe or the amount of their refund since they received an projected/assumed refund in advance of filing the return. In other words - if they usually over withhold by "x", they will receive a refund of x - the prebate. This may cause them to receive less than planned or owe with their return. | |
| 5 March 2008 | |
| but the mechanics of making this work in 2008 would require that the amount that should have been received, but wasn't, be treated as a refundable credit. Thus a higher refund if you didn't get all of 'yours' earlier, or by comparison, a lower one if you already received all you are 'entitled' to receive. | |
| 5 March 2008 | |
| exactly - and I will have that situation for 1 client & prob many more. I would think that the line for this on the 08 taxes would be somewhere near the end of the return - like the telephone tax rebate. Can't wait until we ask what advance rebate the taxpayer received & we get a blank stare & "I don't know, can't you figure that out?"- I wonder if the IRS will have a tax reporting mechanism for this? Our $$$ at work.... | |
| 5 March 2008 | |
| last time they did it about mid-tax season they had a phone line to call in to check, didn't they? | |
| 5 March 2008 | |
| I cannot recall - I think you might be right. To get your refund processing info you need the ssn & amount, so maybe thats how they's do it? Match the ssn & the prior year (07) tax liability? makes sense... | |
| 5 March 2008 | |
| What?!?!?! So the taxpayer essentially pays the $600 - or whatever he/she qualifies for on a rebate - back to the IRS on his 2008 return?
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? | |
Bottom Line (talk|edits) said: | 5 March 2008 |
| It's a freeby for the little old lady. For those that would normally have to pay taxes, it will affect the amount that they owe or will get back. Example 1- person normally gets a refund of $1,000; next year they will get a refund of only $400 because they got $600 in June. Example 2 - person normally pays $500; next year they will have to pay $1,100 because they got $600 in June.
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. | |
| 5 March 2008 | |
| Kendrick, do you know where 'refundable credits' go on the tax return? Where does 'total tax' appear? | |
MEMPHISTAXLADY (talk|edits) said: | 5 March 2008 |
| I'm confused--Kiplinger letter states that there will be a special 2008 tax credit, and that the rebate is an advance payment of that tax credit...Kiplinger Tax Letter, Vol 83, No 4, dated Feb 22, 2008. It states "Technically, the rebate is an advance payment of a special 2008 tax credit. For most, the rebate will equal the tax credit allowed. Taxpayers whose credit exceeds their rebate will claim the balance on their 2008 tax return. If your rebate is bigger than the credit, you needn't repay the Service". HELP!! The Kiplinger Letter has always been a great source of info for me. | |
| 5 March 2008 | |
| Reply to orifginal question, "Dumb question - these tax rebates coming are NOT going to be taxable, right?"
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]. | |
| 5 March 2008 | |
| Ok, I read what Bottom Line wrote and it is not what I understand. Please, someone help me out here.
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 | |
