Does the $600 have to be paid back, or just taxed as income?

[Lance_Boyle]

Anyone? Lots of people are complaining that they have to pay back the entire $600 (or whatever amount) when they file their '08 federal taxes in April of '09. Other sources say you don't have to pay back the entire amount, but you do have to claim it as taxable income. Can anyone point me to a source that has the real scoop?

[rox63]

1. The last time they did this in 2001

the money was taxable, but it did not have to be paid back in full. But I'm not sure if they are doing it differently this time.

[Lance_Boyle]

3. thank you!

I thought I recalled from the 2001 "rebate" that it was taxable-as-income, not repaid-in-full at tax time. Seems there are a bunch of people here who misremember '01's rebate mechanism, and think that this one will have to be paid back in full.

[rsdsharp]

6. I'm not misremembering. You had to pay back every dime.

It wasn't a rebate, it was an advance against a refund. It lowered any refund you would have received by the amount of the check, or added it to the amount you had to pay.

I used a computer program that kept a running total of what my refund or tax debt would be, based on information inputted into the program to that point. The last question was whether we had received a rebate and if so, how much. When I put in "$600" the amount I owed went from $332 to $932. Thankfully, I had expected that, and had put the $600 in the bank.

[Lance_Boyle]

8. Great... now I'm confused again.

:shrug:

I don't suppose that when the bill is signed into law there will be any explanation offered. Maybe the check will come with a detailed instruction manual.

[Lone_Star_Dem]

14. I mentioned here yesterday that I recalled some hocus pocus last time with the tax forms in 2002

For the life of me I couldn't recall what it was at the time.

I did some searching after that and found this article which explains what I was remembering.

MILSTEAD: You recall the '01 tax 'rebate' checks?

<snip>

Already, we are calling the Bush administration plan to give households $800 to $1,200 in cash a "tax rebate," much as the smaller 2001 checks were described.

That was a misnomer. The summer 2001 "rebate" checks were not a rebate of taxes paid the previous April, as many thought. Instead, they were an advance on the refund taxpayers were going to get in April 2002.

<snip>

As you may recall, the checks were part of a major tax-cutting effort in the first year of the Bush administration.

Part of those tax cuts was a reduction in rates, including a drop from 15 percent to 10 percent on the first $6,000 of income for singles and $12,000 for married taxpayers filing jointly.

That equaled a cut of $300 and $600. But instead of implementing the cut in the tax tables that accompanied the 2001 1040s in April 2002, Congress and the Bush administration sent out the checks early, then delayed changing the rates until the tables in the April 2003 1040s.

The forms for the 2001 tax year could have included a line at the end of the 1040 for taxpayers to take the amount of the check and reduce their refunds - or add the figure to the amount owed. But the IRS didn't do that, wanting to reduce the number of calculations necessary.

A good thing, too, for the politicians who were happy to make their constituents think they were getting a rebate, not an advance refund.

Read the rest of the article here: http://www.rockymountainnews.com/news/2008/jan/23/milstead-you-recall-the-01-tax-rebate-checks/

If nothing else this does explain why it's all so confusing.

[newportdadde]

11. Same here, every dime. I do my own taxes via Turbo Tax.

I was running about a 500 buck refund as soon as I got to the section about the rebate in the previous year by rebate dropped by 600. Poof gone and I owed money. I remember talking to my wife about it because it was so suprising(first time I ever owed money).

[annabanana]

16. That's how I remember it. When I got to that line on the return,

I just said... "aww well shit, what good was that"?

[SoCalDem]

22. It's a "payday loan" toward the taxes you must file by 4-09 (08 yr)

You WILL have to "list" it on your form, and IF you would have gotten $1600 in the form of a refund, you will now get "the other $400...if you are a couple who got $1200 in '08)

BUT BUT BUT

let's say you end up only due a refund of $1000....well NOW you will have to mail the IRS a check for $200..(you were OVER-paid by that much in '08)..

and if you were not getting ANY refund , you will owe the IRS that $1200 PLUS whatever you already owed..

The assumption is that "most people overpay the IRS all year, in order to get a refund check..but many people cut it close, so they DON'T get refunds of money they "loaned" the government for free , all year long.. THOSE people are just loaning themselves the $1200, and will have to pay it all back in '09...and guess who WON'T be in the White House then? To many people, this re-payment will SEEM like a big ole tax INCREASE..

[Crazy Dave]

2. Don't know myself but you will be paying it back

As soon as the oil companies know we got a few extra dollars in our pockets gas will go up to $4 a gallon. Here in Florida there's a proposed amendment to lower property taxes an average of $200 a year per household so last year the city mayor added a $200 a year services tax for each city resident, homeowner or renter, to make up for the shortfalls that they said the state tax cuts would cause. Well now that it appears the amendment will not pass after all but the new additional local services tax is here to stay.

[Lance_Boyle]

5. We diesel drivers have it worse at the pump cost-wise

although we do see the pump much less often than gassers. ;-)

[Crazy Dave]

9. I'm aging myself

But I remember when diesel was significantly cheaper than gas was. When gas was around a $1.25 a gallon diesel was around $1.04 and they even had commercials for diesel vehicles using that as a selling point. The $0.21 difference doesn't seem significant today but back then it was and looking at it percentage-wise it was a substantial savings.

[Lance_Boyle]

18. The $0.21 difference goes the other way these days.

Actually, it's more like a $0.40 difference. I just don't understand it. It's still cheaper to make diesel than gasoline.

[Debau2005]

4. I think

they just want to surprise us!!

Besides the masses are all a twitter at getting "free money" (yes I heard that in the office) that if the misadministration lets us in on the details of how it is going to cost us more in the end, the masses might actually get upset! Yes, I know probably not.

I heard people the last time complaining that they had to claim it on their taxes, they thought it was a free gift from their wonderful govt. How soon they forget...

Half of mine is going into a long term savings plan, the other half to a therapeutic riding non-profit I volunteer for.

[ayeshahaqqiqa]

7. Had an argument about this this morning

My co-worker insisted that the TV said it wasn't going to be taxed. I told him it would. I don't know if anyone knows at this point.

[Gormy Cuss]

20. If it's like the last one, then technically it's not taxed.

As was explained above the earlier Bush gift was an advance against the next year's refund, assuming that everyone who got it would have received of refund that big. So it was not a taxable amount, it was an adjustment.

Either way you look at it, to many people that last shell game was a nasty surprise at tax time.

[Iwasthere]

10. The public needs to know the answer NOW!!!!!!

BEFORE they decide on the specifics. This needs to get out there NOW!!!!

[newportdadde]

12. Yeah I don't understand why we can't get an answer on this.

My gut tells me if nobody wants to come out and say it then it has to be paid back.

[Iwasthere]

15. That's right if they don't talk and few bring it up, "VIOLLA ! Another sick twisted loan/joke"

.... made to look like look like free money. An awful joke on the poor imo.

[Skittles]

17. they don't tell you because they want you to spend spend spend

it's likely a significant number of people would treat the money differently if they had all the facts

[Kajsa]

19. Unfortunately, Patmccccc,

it's not the first time the Feds. have kept the public
in the dark.

It's becoming a pastime for them.

;(

[napi21]

13. I heard that question asked on TV in one of the interviews, and

the response was "We haven't discussed that yet." If I had to guess, it will NOT be free money, but how they will handle it this time is yet to be decided.

[onethatcares]

21. I don't want the shiny trinkets from this government, who

do I contact so I don't get one of these "check" things?

[Lance_Boyle]

30. Just don't cash/deposit the check.

Let the IRS know you don't owe it back by sending the check to them with your '08 tax return in April '09.

[aikoaiko]

23. Paid back in April 2009

I have a pretty clear memory of doing my taxes in Turbo tax after the last rebate and watching my refund shrink 300 dollars after answering the question of whether or not I received a tax rebate.


Maybe my memory is incorrect.

[Gidney N Cloyd]

24. The last one was an advance on your fed refund that was taxable on your state & local income taxes.

Here in Illinois we have a state income tax and that little $300 advance moved me from getting a state refund to owing the state. I don't recall paying federal income taxes on it, though.

[alfredo]

25. I would suggest not spending the refund. Put it in savings.

[blonndee]

26. Or putting it on high-interest debt like credit cards. That's what I'm going to do. n/t

[alfredo]

28. That's even better if you are carrying debt like that. Still, I would put

some money away just in case they come back for the money next year.

[MiniMe]

27. I think it is an "advance" on your tax rebate. In that case, it would be like

you had $600 less withheld, which is not taxable. But who knows.

[pitohui]

29. did we get a definitive answer to this?

frankly i'm still puzzled and i would like to know, if the money is not coming out of my tax refund (already earmarked) then i have another project where it could certainly be put to use