Rebate or Advance?

Reading your discussion I became curious and started searching and this is what I came up with: According to the IRS, you will not owe taxes on your rebate when you file your 2008 income tax return. However, you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. In the event you do not qualify for the full amount this year but you do next year, you will need to have the letter as a record of the amount you previously received. In addition, your tax rebate will not reduce your refund or increase the amount you owe when you file your 2008 tax return. I hope it helps!

The last time we received money from this "rebate" it had to be filled into the tax form and it was taxed for people that earned more than a certain amount. It might be great for people getting money back already, but we pay out every single year. I told my husband we should just mail it back. Its suppose to help the economy, but many will use it to pay bills. If it arrives before April 15th, then its headed to the IRS.

Modesta I am so glad that you posted this discussion as I had been wondering the same thing! I had read some things very similar to what you describe which indicated that the 'bonus' was actually an 'advance' on next year's refund. I was happy to see countrymusiclover's response and do hope vehemently that what that response indicates is indeed true. I can't imagine getting a 'windfall' this year only to suffer next year...in fact, I would just rather not get it if that were the case! Again, thanks for a great post!

Ops..gave the wrong discussion: Heres the link to the article I found telling all about the "rebate" check soming this summer...... http://finance.yahoo.com/taxes/article/104417/Tax-Rebate-Winners-and-Losers I coyp and paste a portion here: Will a refund affect my rebate? Speaking of refunds, some folks have expressed concern that if their 2007 return gets them tax money back, they won't get a rebate check. Not to worry."Your refund has nothing to do with it," says Scharin. "The rebate is treated as if you gave the government extra money and then it is sending it back to you. It's sort of like extra withholding."In fact, although the rebates will be determined by your 2007 tax filing data, the money actually is officially an "advance credit payment" against your 2008 income. So it has no bearing on your 2007 taxes, whether you owe or get a refund. And that leads to our last frequently asked question, or rather questions. What will the rebate mean to my 2008 taxes?Will I owe taxes on my rebate amount next year? What if this year my situation changes and that means my rebate amount should be less?For most filers, says Luscombe, this year's rebate will appear as a simple gift from the government. The rebate amounts are tax-free. But filers will have to reconcile any money they receive this year when they file their 2008 returns."It harks back to the 2001 situation when we got the new 10 percent bracket and got an advance check for that. Then on next return had to account for it," says Luscombe. "It's expected to be that way this time." *******The 2008 tax forms should have a line for the new credit. When calculating taxes next year, taxpayers will have to subtract what they got as a rebate check the previous summer.*********

Here's the discussion I started and the link that I had to read about it http://www.mylot.com/w/discussions/1428132.aspx?p=2#2_16811091 It is an "advance" on what your refund will be next year. It is not taxable income, next year, just a deduction from what your refund will be. If you get $500 this summer, next year you do your 2008 1040's and your refund is $1,000, you deduct the $500 from this summer and you only get a refund of $500, not the $1,000. It won't make you owe if you refund is only $200 and you got $500, it only reduces what you get - doesn't tax anything, doesn't make you owe anything.

It is an advance on a credit that will be on next years taxes. So, they passed a credit for 2008 tax year since it was too late to add it to 2007 - and they will give it to us early. There will be no taxes on this money since it is money we would get back next year anyway, and if next year you actually qualify for less you won't have to pay back the difference, but if you qualify for more you will get the additional credit.

they will probably do neither, it makes great press to claim that you are going to put some money back into the pocket of the people it came from but the fine print reqirements to qualify for such financial aid will prevent all but a few people from cashing in on this stimulus bill.

The way I understood, it is an advance on your next years tax return. I am all for something the pumps up the economy as the alterative would not be pretty. I do however not agree with helping out the banks that made bad loans to people that could not afford them. They were sticking out their necks and should have to take responsibility for what they did.

Yes, you will have to claim it as income on next year's taxes, however, if you received a refund this past year, chances are, you will not be greatly affected by it. It will basically be considered income, not an advance on your refund for next year. It is not a loan. It is considered as income. You will have to pay taxes on a portion of it next year. However, depending on the number of dependents, and based on the fact that it is 300 per person, it's most likely only going to reduce your next years refund by roughly 15$ per person you received the advance for.

Here is a page that has some answers: www.bankrate.com/brm/itax/new/taxguide/2008021_tax_rebate_plan_faq_a1.asp On the 3rd page it addresses this question. I would post the paragraph, but I cant copy and paste. It says 2008 tax forms will have a line for the credit, and a line for the rebate received. It is saying that you just wont get the credit next year if you get a rebate this year.

I got something in the mail from the IRS i believe you get 1200 if you file a joint return and i know you get 300 per kid

I have not read this myself nor do i know it to be true for a FACT however, someone told me our government took a loan out from china to give us this money as a loan. We will have to pay it back out of our taxes in years to come.So next year or whatever we will get less of a return ....as i understand it. Well hope this sheds some light.