Tax Rebate - No Free Lunch
 
Date: Tue, 12 Feb 2008 08:57:24 -0600 (CST)


tax rebate = advance on tax return

Begin forwarded message:

Friends, don't spend your rebate.  It is an advance on your 2009  
taxes.  The bill will become due.

Subject: Tax Rebate - No Free Lunch

Date: 2/9/2008

According to this little article, the up coming rebate check we will  
be receiving is not really a rebate, but an advance on your 2008 tax  
return. In other words, whatever you get will be deducted from your  
tax refund (or added if you owe). No free lunches.

http://articles.moneycentral.msn.com/Taxes/Advice/TheDetailsOnTaxRebates.aspx

Extra 2/8/2008 10:00 AM ET
America, don't blow this rebate.   Congress wraps up the details:  
$300 for retirees, $600 for most individuals and $1,200 for most  
couples. But wait, there's more: It's not really free money.

By Liz Pulliam Weston

Some Americans are getting awfully excited about the prospect of  
spending their own money.

The $168 billion economic stimulus package just passed by Congress  
will ship checks of up to $600 for individuals and $1,200 for  
couples starting in May. Most households will get these checks,  
although individuals with adjusted gross incomes of more than  
$75,000 and couples making more than $150,000 will see less or  
nothing at all.

Additionally, families will get $300 per child.  The biggest change  
since the original proposal: Those who paid no income taxes will get  
$300 as long as they earned at least $3,000, including veterans  
disability or Social Security benefits.

An estimated 130 million taxpayers will share the rebate money.   
Here's what you need to keep in mind while you're waiting:

This isn't free money -- for most people

To produce this cash, Congress created a one-time tax credit to  
reduce taxable income for most taxpayers this year.

Normally, you wouldn't see that cash until the spring of 2009, when  
you filed your 2008 return. But Congress wants to speed that money  
to you now, so checks will start going out in May.

Smart Spending blog: Rebate? Bonus? One is easier to spend.

Remember, this is your money you're getting back, and the rebate  
checks are basically an advance on your 2009 refund. When similar  
rebates were sent out in 2001, said tax expert Mark Luscombe, "a lot  
of people were upset to see their (next) refund reduced."

The only people for whom this really is free money are low-income  
folks (those who earn at least the minimum $3,000 required to  
trigger the checks or who receive at least $3,000 in Social Security  
or veterans benefits) who won't end up owing any taxes for 2008.

If that's your situation, or you somehow wind up with a check when  
you technically shouldn't have -- you earned income in 2007 but  
won't in 2008, for example -- you won't have to pay back the money,  
said Luscombe, a principal analyst for tax research firm CCH.

By the way, even if you didn't earn enough in 2007 to be required to  
file a tax return by April 15, Luscombe said, you probably should do  
so anyway to make sure you get on the Internal Revenue Service's  
mailing list for the rebates.

The agency will get information from the Department of Veterans  
Affairs and Social Security to make sure those recipients get rebate  
checks, Luscombe said, "but regular taxpayers will need to file (for  
2007) to get on the list."

Spending money is not your patriotic duty.  Yes, Congress and  
President Bush hope you'll blow this money as quickly as possible to  
give the economy a shot in the arm.

But politicians' short-term attempts to influence the economy -- and  
their ability to get re-elected -- should not be your primary  
concern. Doing what's right and responsible for your own finances  
will leave you better off and will probably be better for the  
economy in the long run.

Credit card rates are on the rise.  I mention this because some  
people have been able to carry hefty credit card balances at  
remarkably low interest rates for years, but those days may be  
numbered. Many banks are cutting back on their low-rate transfer  
offers and jacking up rates even for good customers. If you have any  
credit card debt, the best use for your rebate check is likely to be  
paying it off.