Rebate Fact and Fiction
The recent economic stimulus bill passed by Congress and signed by the president promises checks in the mail to millions of taxpayers. But the question of how much you get -- and when -- will no doubt result in some confusion.
In an effort to clear up what to expect, the Internal Revenue Service has put up a useful page on its Web site, http:/
For goodness' sake, use this information to learn what the payments mean to you. Don't rely on what you might find out from a friend, an e-mail or the Internet to determine whether you are due a payment and how much. Already, scammers are contacting taxpayers trying to elicit personal information using the stimulus payment as bait, the IRS said.
During a recent online discussion, one person trying to be helpful wrote: "Do you think that people realize that the stimulus package, a.k.a. tax refund, really counts against their 2008 return?"
Another reader was concerned about paying taxes on the stimulus payment.
"I've heard this is basically an advance on next year's taxes and we'll have to pay it back," the person wrote. "I usually owe taxes, so that has me worried."
Both are misinformed. First, this money is not taxable. And your stimulus payment will not reduce or increase any refund you are entitled to when you file your 2008 return.
The stimulus payment -- some call it a rebate, others refer to it as a refund -- is based on your 2007 tax return, but it is considered an advance on a 2008 tax cut. In most cases, payments will range from $300 to $600 for individuals and $600 to $1,200 for joint filers. Taxpayers may receive $300 for each qualifying child.
"It's like a one-time credit, not unlike the telephone tax refund people got," said Eric Smith, a spokesman for the IRS.
You remember the telephone excise tax refund payment, right? That was a one-time refund available on your 2006 federal income tax return. It was a refund of previously collected long-distance telephone taxes. In that case, the standard refund ranged from $30 to $60.
This time, if you don't qualify for a stimulus payment based on your 2007 return, you may still be due some money.
"You get two shots at this," Smith said. "Most people will get [a payment] this year. But if you don't qualify for the full amount or you don't qualify at all, you get a second shot based on your 2008 return."