Now that this appears to be a done deal, I want to know…
Is it essentially a “prebate” on income taxes we’ll supposedly be paying during 2008 and will it thus reduce any refund we may have coming then? What if we’ve tweaked our W-4 withholding such that we don’t usually get more than a $150 refund: what then? Will we need to pay the stimulus money back (seems like that wouldn’t be much of a stimulus), or is it a straight one-time $600 reduction in our owed income tax for this year? I’m off to check wikipedia now…
No, they are creating a brand new tax credit for 2008, then giving it to you in advance. They know your 2008 AGI is likely to be different, so if it turns out you should have received less, you do not have to repay the difference. If it turns out you did not receive enough, you get the additional amount then.
The way I understand it, this is a tax credit (like the earned-income credit) which they are just sending you in advance. It should have no effect on your withholding (in other words, if you would pay $1200 in taxes in 2008, and you are withholding $100/month, then you will still withold the $100/month, but only end up paying $600 total, because they are sending you a check for the other $600).
No, it’s not in any way an advance payment or rebate of otherwise owed taxes. It’s free money with no strings attached. Eligibility and payment amounts will be based on your tax return filed this year by April 15 based on your income earned last year. So there won’t be any need for the IRS to do any after the fact refiguring of whether you got the right amount. If you don’t file your taxes on time, you don’t get your check until you do. If you delay filing so long that the IRS can’t figure out what you’re owed and get your check out by December 31, then you’re out of luck, since by law no checks can be sent out after the end of the year.
Q:But what about all these rumors that the payments will cut into what I get as my refund next year? A: They’re wrong, congressional staffers say. “Please be aware that there have been erroneous reports that stimulus rebate checks are an advance on next year’s tax refund, so that any refund a taxpayer might normally receive would be reduced by the amount of the 2007 stimulus check,” says the Baucus aide. “This is not correct.”
BTW, from what I can tell this is spending done through the tax code. It’s not changing the tax code at all. That’s the only way that folks who make over $150 can’t benefit b/c it’s a spending and not a tax code change. Otherwise the structure of the US tax code ensures that those people would eventually benefit from the rebate.