Stimulus Payments

Posted by Bruce Mc on Jun 8, 2008 in 2008 Stimulus, Stimulus payments, Taxes | 0 comments

           It’s not taxable, it won’t reduce your 2008 refund, or increase the amount if you owe when you file your 2008 return in 2009.

            So where is the money coming from?

Well, our government has a deficit projection to reach $410 billion this year. This is up from $162 billion from 2007. So it isn’t from the government. Yet the money is coming from somewhere. Or it will be.

            Okay, the stimulus package funds (your stimulus payment), are coming from a credit that will be on your 2008 return. A Cash advance so to speak. Remember in 2003 President Bushs’ tax cutting program? (The increase in the child tax credit from $600 to $1,000 per child. Families got a check for $400 per child in 2003.) Remember in 2001, the advance refund on your 2001 taxes? A tax cut that reduced the tax rate to 10% from 15% on the first $6,000 of taxable income. Because the government didn’t yet know how much you’d earn in 2001, the rebate was based on your 2000 taxable income. Most filers received a $300.00 check. The year checks went out, the amount received was deducted from your return.

The 2008 Stimulus payment is the same sort of thing. See for yourself, look back to those years returns if you were eligible for the money that came about. The same will be of this new credit in 2008.

What this boils down to is this: No, the money isn’t taxable, but the relief it would have given you on your 2008 taxes will be reduced by the amount of your stimulus payment.

I am not sure if I’d rather have the credit when I file next year or the cash now. Of course I don’t remember that we were given that choice.

For more great views on the stimulus whatever it was/is check out THE WONDERING TAX PROs section on it all.

Bruce the “tax guy”

© 2008, Bruce Mc. All rights reserved.