Amidst yesterday’s discussion of the new tax rebate plan, a reader named Randy asked:
Will 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?
This is a great question, and the answer wasn’t entirely clear based on what I had read yesterday. After a bit more digging, however, I’ve found the answer…
Unlike a similar stimulus program in 2001, the money is an outright payment, not an advance or offset against the next year’s tax filing.
So… The money will be yours, free and clear.
While I touched on the structure of the plan, I thought I’d revisit it here again:
The rebate checks would be increased by $300 for each dependent child, without limit. That means a couple with four children and taxable income of $100, 000 after deductions would receive $2, 400. The rebates are not taxable.
Payments would be phased out for individuals with more than $75, 000 in taxable income, and joint filers earning more than $150, 000.
I still haven’t seen details on exactly how the phase out would work, though it appears that the calculations will be based on 2007 numbers.
Update: I’m running a poll on what you’re planning on doing with your ‘economic stimulus’ check.