I already checked with my CPA on Friday - that's correct - it's a government 'advance' that will need to be paid back on your 2009 income tax form.

WHAAAT! That's not a rebate! That's insane!

Yes, that is true. It is your own money, and it is an advance. Dave Ramsey was talking about that today when I was listening to a re-broadcast of his radio program.

I found this information:

This isn't free money -- for most people
To produce this cash, Congress created a one-time tax credit to reduce taxable income for most taxpayers this year.

Normally, you wouldnÂt see that cash until the spring of 2009, when you filed your 2008 return. But Congress wants to speed that money to you now, so checks will start going out in May.

Remember, this is your money you're getting back, and the rebate checks are basically an advance on your 2009 refund. When similar rebates were sent out in 2001, said tax expert Mark Luscombe, "a lot of people were upset to see their (next) refund reduced."

The only people for whom this really is free money are low-income folks (those who earn at least the minimum $3,000 required to trigger the checks or who receive at least $3,000 in Social Security or veterans benefits) who won't end up owing any taxes for 2008. If that's your situation, or you somehow wind up with a check when you technically shouldn't have -- you earned income in 2007 but won't in 2008, for example -- you won't have to pay back the money, said Luscombe, a principal analyst for tax research firm CCH.

I think the whole thing is just ridiculous, and now I think it even more so. I did wonder where the money was coming from, so that's an answer. But does anyone think this will really stir the economy that much? People will no doubt use it to pay bills, or save it, so that won't do much stirring.

I did not know that!

I have said about the rebate idea that I thought it was senseless, except for what low income people would get, because they are the ones who most likely would spend it, rather than save it.

How did we ever get to this point?

Oh, yeah, that's right.

Sue

Can we decline the money?
Donna

Things are being misunderstood here.
Don't panic.

The idea that this rebate will be taken out of your next year's refund ???
No.
Do you realize how many people don't get refunds? because they don't believe in having money held by the goverment for a year, with no interest, and so they underpay during the year.
For accounting purposes, the rebate amount has to be recorded, and balanced. Too late to have it represented on this years tax forms (for Y2007), and you will recceive it in 2008. So, it has to be reconciled on the 2008 return, and that will be done by filing it as a tax credit (a tax credit is a subtraction from taxes owed).

Another way to say it is that the rebate is a new tax credit which you are getting now and will be reflected on your 2008 return that you file in 2009 (i.e., it will show as a credit on your 2008 return, but then will be balanced by the payment that the Government has already made, for a net of $0).

You still have to list it as income, right? As you do any rebate? Can't come in a worse year for me. I won a significant prize at the end of last year (haven't recieved it yet, so it will be assessed on 2008's taxes). My mother died at the end of 2007, so I'm going to have to claim my inheritance from her--which is pretty much going to double our annual income. And we own 18% of a piece of property (worth between a half and 3/4 of a mill) that has to be sold this year--no telling what that is going to do to our taxes. Guess we might just as well send every check we get this year right to the goverment, without even opening it! LOL! My accountant is definitely going to be earning his fee this year. And I WILL be getting him to help me set up my finances to counteract this horrible run of luck, when I see him this week.

From what I understand from my Dad who is a CPA, the refund check is based on the taxes that they suppose your income for this year will be. Now if you make less money this year and were paid too much this year on the check you don't have to pay it back. On the other hand if you make more this year that they expect then you will get the difference in what you got and what you should have gotten back next year when you file your taxes.

Hope that this helps you out:)

Stacie

This is news to me, and I still don't understand how it works. Can anyone put it in terms of a dollar figure?

Pretend my salary isn't going to go up and I've received about a $100 rebate the past couple years. Does that mean that this year I'll get $200 but that my income will go "up" by $100 next year and so I'll be taxed on that extra $100? So my rebate next year will be less than $100, right?

And nobody said--can you refuse the rebate? And if you do, will everything go back to "normal"?

A rebate is NOT income.

You do not have to pay anything back.

It's a tax credit item on next year's tax form.

Could you provide a link to the article? I searched but can't find anything. Thanks.

SO those of us who OWE every year will OWE more next year?

Just what I was going to ask Luann. I have just mailed a good size check to the IRS does this mean next years check will be bigger that I send.