Tax Rebate Details Announced
According to an AP report:
Congressional leaders announced a deal with the White House Thursday on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children…
The rebates will go to 117 million families, according to a Democratic summary. That includes $28 billion in checks to 35 million working families who wouldn’t have been helped by Bush’s original proposal, the analysis estimated…
Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.
While they say that the bill calls for rebates to go to “almost everyone earning a paycheck,” there are income limits, as follows:
The full rebate would be limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less, but a partial rebate would go to individuals earning up to $87,000 and couples earning up to $174,000. The caps are higher for people with children.
The package, which will cost about $100 billion, includes about $50 billion in business tax cuts.
This all begs the question of what you will do with your rebate… Save it or spend it?
Update: I’m running a poll on what you’re planning on doing with your ‘economic stimulus’ check.
[Source: Yahoo! News]
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So, who do people with children get more back than those that don’t?
People with kids get to deduct them from their taxes when the file to begin with. It’s a double tax deduction!
Comment by Justin — Jan 24th 2008 @ 3:17 pmAll of this is just a short term fix. And truth be told, it has been happening over past 3 decades. Reagan and Clinton have just as much blame as the current administration.
Comment by rawdawgbuffalo — Jan 24th 2008 @ 3:25 pmLooks like I’m going to pay that car off faster than I anticipated…
$1500 + the CD I put together just for the purpose of paying off the last $3000 will get me most of the way there.
Comment by That One Caveman — Jan 24th 2008 @ 4:07 pmI’ll probably be “spending” it on my student loans…which in a way is like saving money, since I’ll eventually pay less on interest.
Comment by Stephanie — Jan 24th 2008 @ 4:14 pmcan’t wait to get my check so i can buy more crack and plasma screen tv!
Comment by jim — Jan 24th 2008 @ 4:19 pm“why do people with children get more back than those that don’t?”
Maybe because they have more basic expenses than a single or couple? If you want to have more money, having more kids is not a recommended strategy, even with the tax breaks.
Comment by geo — Jan 24th 2008 @ 4:32 pmI’ll probably spend some of it, save some of it. It’s unexpected, i.e., not part of this year’s forecasted budget, and I’ve been so good with my money. So good, in fact, that I’m starting to feel like I haven’t had much fun lately. So I’ll deliberate and spend at least a little of it on something completely frivolous, like a Nintendo DS or a new pair of glasses. Then the rest goes straight into the emergency fund.
Comment by Lana — Jan 24th 2008 @ 4:46 pmI’ll save it.
Comment by Seth — Jan 24th 2008 @ 4:53 pmI plan on saving it. Combined with my tax return this year, I can really make some huge increases in my Emergency fund.
Comment by Jon — Jan 24th 2008 @ 5:02 pmWill this work the same as the last Bush rebate? Meaning it reduces he amount of my tax refund by the amount of the rebate I receive? For some reason, I think this is how it worked in 2001. The down side is that if you are managing your taxes to break even, you have to pay it back then, right?
Comment by Randy — Jan 24th 2008 @ 5:12 pmOurs will be going right back to the government… my husband has to renew his Green Card, and which costs over $500. The rest will go towards our first trip to his country in 3 years.
Comment by Cindy — Jan 24th 2008 @ 5:22 pmI’ll save most of it - it will probably head right into my Roth.
Comment by Kim — Jan 24th 2008 @ 5:23 pmPay off debt!!
Comment by JR — Jan 24th 2008 @ 5:48 pmI think it’ll go into my emergency fund. This will be a nice boost.
Of course, given our culture, the majority of recipients will do exactly what Uncle Sam expects - and that is SPEND IT on material junk. Although I don’t plan to send the money back, I think this rebate is nothing but a sad way to perpetuate our nation’s economic problems.
Comment by Brett — Jan 24th 2008 @ 5:48 pmWell, considering this check won’t get here till the summer (at the earliest), I doubt this will have an impact on consumer spending like those in charge want. By the time everyone gets their money, the current economic conditions will have changed.
Of course, that isn’t the question you asked - I’m going to spend it like they want me to. It’s either going towards a beach house rental or Vegas.
Comment by thomas — Jan 24th 2008 @ 5:56 pmThis will go into our already-established fund for our vacation this fall.
Do you think the income limits will be based on Adjusted Gross Income, or some other measure?
Comment by SteveK — Jan 24th 2008 @ 7:06 pmGreat, 29% of my income already goes to taxes (FICA), and now I don’t get to participate in the “stimulus.”
Comment by Mark — Jan 24th 2008 @ 7:39 pmHas anyone noticed that all this tax credit does is to further promote overpopulation? I know that people with kids need more money to be stronger consumers and continue to run this capitalist economy, but will we ever start to reward people for not having kids and gain some sort of control on the population?
Comment by Fred T — Jan 24th 2008 @ 7:40 pmI read that working couples can get up to $1200. My husband works and I am a full time student. Do we still qualify as a working couple?
Comment by Jacqueline — Jan 24th 2008 @ 9:02 pmBelieve me, having kids is more expensive than the $1k tax credit you get per child! I spent that in diapers and formula alone the first year into parenthood.
Comment by Frugal Dad — Jan 24th 2008 @ 9:04 pmWhether or not having kids costs more is irrelevant. If you are already paying in less to begin with because you have kids, why should you get even more back?
Also, has it been determined yet whether this is actually a rebate and not just a pre-refund for next year?
Comment by justin — Jan 24th 2008 @ 9:08 pmBecause I’m a diligent saver I already have $600 or $1200 (whatever it is I’ll be getting) and I would have already spent it if there was something I needed - so I’ll mostly be saving it. I’m not just going to go out and buy something frivolous like a flat screen TV when the oldie I already have works and gets a really good pic.
I don’t think I’m the type of person the government was targeting when they wanted to spur the economy - and I figure most of you aren’t either. Cause most everyone here is a saver, not a spender. Most of you, I suspect, will either apply it to debt or save it with your emergency fund - good for you!
Oh, I do need new tires, so I guess I’ll get those, but it wasn’t like I wouldn’t have bought them anyway.
Comment by KC — Jan 24th 2008 @ 10:05 pmI will try to save it, my husband will want to spend it.
We will work out a compromise!
Comment by Lea — Jan 24th 2008 @ 10:21 pmAs far as kids go, we are raising future workers, of course! Over-population is a myth, sorry. Most industralized countries are struggling with *under*-population. People have stopped replacing themselves, and their economies are starting to feel it big-time!
As far as it *feeling* like we are running out of room, it *is* getting crowded in our area too. This isn’t from over-population, though. It is from the clustering that people do in suburbia.
Apparently, the whole world could live in Texas.
Somebody has to have the kids who will work and keep social security solvent!
Comment by rocketc — Jan 24th 2008 @ 11:30 pmI don’t know the underlying intention of the child tax exemptions, but one could argue:
A) Promotes certain behaviors / values
B) Incentive to increase birthrate in US
It has been cited many times over that we will have a labor shortage in the coming years…promoting increased birth rates via tax incentives seems a reasonable rationale for it.
If I have something I need, I’ll buy it. Otherwise, the rebate will be treated no differently than any other “income” over here.
Comment by pfodyssey — Jan 25th 2008 @ 12:16 amOur $1,500 is going right into our Roth IRAs!
Comment by pfmoron — Jan 25th 2008 @ 1:01 amDoes anyone know if this is for adjusted gross income (after all tax deductions)?
I am going to pay my heating bill with mine!
Comment by Lisa Spinelli — Jan 25th 2008 @ 7:32 amSadly, I changed jobs (from a contracting job to a W-2 based job) right before Q2 estimated taxes were due and somehow convinced myself that it would all “even out”. Well, I don’t have all my W-2s back or anything, but I think I am looking at a $2k tax bill that I don’t have the money to pay for all of it. I’ll use my refund to help pay back any money I need to borrow to pay this bill.
Comment by Brandon — Jan 25th 2008 @ 8:33 amAssuming we actually get money back (ie. this doesn’t simply reduce our tax bill), we’ll be putting it towards debt.
Comment by Anitra — Jan 25th 2008 @ 8:48 amI will save part and spend part on remodeling. I do wish that the next President would end the deficit.
Comment by Jon T. — Jan 25th 2008 @ 10:09 amLet me get this straight, the Federal Reserve over stimulates the money supply causing a housing bubble. Then people who borrowed too much foreclose on their overpriced houses and overdraw their credit cards. This causes banks to lose money.
All this spending causes a slow Christmas season at Wal-Mart.
So what’s the solution to this supposed ‘economic slowdown’ caused by overspending? Send people checks to get the Wal-Mart registers ringing again and (try to) spend our way out of a recession.
The new circle of life: Congress borrows money from China, sends it to Americans, who then send it back to China buying cheap manufactured goods.
So this means all of you planning to save your refund money are UN-AMERICAN! Do your patriotic duty and get out there and spend Spend SPEND!!!
Comment by Ernesto — Jan 25th 2008 @ 10:20 amTo those that commented about the double tax deduction for children, I completely agree. Having children is a choice, and like all choices should be something that people decide on after looking at all the implications. If you can’t afford them, don’t have them. Not only are we punishing those that choose not to have children, but we also punish those that can not have children, such as reproductive cancer survivers, homosexual couples, etc. If this country had its priorities straight it would end the unfair income tax system and find a more equitable system with no deductions or loopholes.
Comment by Jason H — Jan 25th 2008 @ 10:22 amjust curious..
Comment by chris — Jan 25th 2008 @ 10:31 amdoes anyone know if my husband works and i am a stay at home mom, will we be considered individual or couple for this rebate thing. we file taxes jointly, so i was just wondering if they go by that or if i actually earned a paycheck. i earn my paycheck, just not in the tradional way, with 2 kids under 2 1/2 at home.
thank you for anyone who knows.
I believe that it will be based on 2007 filing status.
Okay folks… Let’s stay focused on the topic at hand — otherwise I’ll have to lock down the comment form on this article. I’ve gone back through and removed off-topic comments (on both sides of the debate).
While I realize that this might not be a popular decision, things were starting to get out of hand. Thanks.
I’m having a kid in February — will I be able to get the additional $300?
Comment by Boris — Jan 25th 2008 @ 2:47 pmOkay, comments locked.
Apologies to everyone that was actually discussing the topic at hand.