Will the money from the stimulus plan check come directly off of our refund check for the 2008 year?
I have been told different things. Would to be comeing off of the amount of refund for next year, so I will a refund 3500 for 2008 will the 1500 from the stimulus check come right off of that or is the 1500 to be claimed as earned income. They said the last time they gave these checks it was added as earned income.
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May 29th, 2009 at 7:30 pm
NO! It's not working like last time.
The rebate will not effect your 2008 federal tax liability or refund. The law says the IRS can't recover any extra rebate payment by reducing your 2008 refund or adding to your 2008 tax bill.
The "rebate" is an advance credit against your 2008 tax return (which will be filed in 2009). However, it is calculated based on the amounts shown on your 2007 return. When you file your 2008 return, the IRS will recalculate your "rebate" based on the 2008 amounts. If this results in a larger "rebate", you will receive a check for the difference. If this results in a smaller rebate, you will not have to repay the difference.
The "rebate" will not increase or decrease any tax refund to which you are entitled. It is an additional refund.
May 29th, 2009 at 7:30 pm
I just got an answer on this from my financial advisor - it will not have any effect on next year's tax return/refund. There is a list of FAQs on the IRS website and there will be a document sent along with the check. The stimulus check is not taxable and will not reduce any refund you'd be entitled to next year.
May 29th, 2009 at 7:30 pm
It will not effect your refund next year…
Say the IRS didn't send out the checks when you file your 2008 return the tax break will be included in your 2008 tax refund. So instead of waiting until we file our 2008 returns they are giving the money to us now, so we can stimulate the economy. When we file our 2008 return the tax break will be washed out and will not effect your bottom line.
May 29th, 2009 at 7:30 pm
What someone is telling you is incorrect. Take a look at the source below for the 1040 Form from back in 2001 (which was the previous time this happened).
You'll notice on the 2nd page (Line 47) is where the Rate Reduction Credit was accounted for. (Note that this is a "credit" — having nothing to do with earned income (Line 22), adjusted gross income (Line 33), or taxable income (Line 39). This was a credit — given to you on top of everything else.
The "worksheet on page 36" that Line 47 references, was a worksheet where you calculated whether you had gotten as much tax credit as you had been entitled to. If no, then you got more; if yes, then you got no more; if you had gotten too much, the instructions indicated that you didn't have to pay that extra back, nor were you taxed on the extra. (From what I've read, this is the same way it's going to be done this time.)
So, whoever is telling you "different things" is mis-informing you.
May 29th, 2009 at 7:30 pm
For 2008 there is a one-time tax cut for income in the 10% bracket - the rebate is an advance on that. If your rebate is more than the tax cut would have given you, you don't have to pay back the extra. so your refund next year will be the same as it would have been if there had been no stimulus bill (no tax cut, and no rebate).