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Thread: Are the rebate checks due in May considered taxable income for 2008?

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    Default Are the rebate checks due in May considered taxable income for 2008?

    Just wondering. I would guess that this is true. In which case, please give me a $600.00 tax credit for 2007 instead!

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    God/dess VenusGoddess's Avatar
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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Some places say that it IS taxable income for 2008. Others state that the credit will be offset in 2008 with other deductions (or something like that).

    Joe and I have been talking about just sending it back. We'd be getting around $1800 and I just don't see paying more on taxes next year. We'll have to see how it all goes, though. If it counts against us, it's going back. If it doesn't, then we may keep it and throw it into some investments.

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    Thumbs down Re: Are the rebate checks due in May considered taxable income for 2008?

    Quote Originally Posted by Pan Dah View Post
    Q. Is my stimulus payment taxable?

    A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. You will need to know this amount next year when you fill out your 2008 return.

    Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?

    A. No, the stimulus payment will not reduce or increase your refund when you file your 2008 return.
    Words of warning:

    1) The answers supplied by the IRS only apply to Federal Income Taxes. Many states do view the "stimulus payment" as taxable.

    2) It will increase your taxes in the long run. The government is borrowing money from the Chinese to send out these checks. They (you) will eventually have to pay for the money, and that means you'll eventually wind up paying taxes of $5,569.86 over 30 years for May's $1200 check. (30 Year Treasury Bond at 5.25%).

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    ^ Thank you for that info!

    What happens if you choose not to accept the money? Can you do this and if so, how?

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Wow-I was hoping to put that towards some debt. And hoping that lots of sc custies would spend theirs at the club. I'm sure Nj will be taxing it. Like everything else.

    Venus-do you think it would help to not accept it?

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. You will need to know this amount next year when you fill out your 2008 return.
    Also please keep in mind that any taxpayers that are subject to the Alternative Minimum Tax next year WILL wind up paying more federal income taxes as a result of the 'stimulus check'. Depending on what the US congress decides to do about continuing AMT tax relief versus letting current relief measures expire, next year's AMT could extend down to people earning $75k or so per year i.e. full time dancers.


    They (you) will eventually have to pay for the money, and that means you'll eventually wind up paying taxes of $5,569.86 over 30 years for May's $1200 check. (30 Year Treasury Bond at 5.25%).
    Absolutely true. However, the gov't is probably counting on the fact that the average 'value' of the $5,569 in bond payments over 30 years will be vastly reduced by inflation / devaluation of the currency i.e. $5,500 20 years from now buying what $1200 buys today.

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Please forgive me if I'm hijacking the thread.

    Here's my follow-ups to responses:

    Including Inflation:
    I should have put in the real value of the coupon, or interest, they pay every six months.

    Taking the government's figures for February 2008:
    UST 30yr Bond: 4.66%
    US CPI: 4.1%
    Real Interest Rate = (1 + 0.0466)/(1 + 0.041) - 1 = 0.0054, or 0.54%.
    Effective Real Interest Rate w/semi-annual coupon payments: 0.54%

    So, with that, the real cost of $1200: $1,394.40

    sources:
    http://www.treas.gov/offices/domesti...te/yield.shtml
    http://www.bls.gov/cpi/

    ---

    Basis of States Claiming Rebate Checks Taxable Income:

    The short answer is: "Because the state elected officials can do whatever they want in declaring what is and isn't taxable as long as it doesn't conflict with Federal Code, IRS Rulings, or US Tax/District/Supreme Court Decisions.". Taxes are all about generating revenue while getting elected officials re-elected. Fairness and sensibility are not as big of a factor as one would hope.

    I wouldn't even know where to start with posting citations for all 50 states, but it will be counted as income in 2 of the 5 states I pay taxes in. You'll have to check it for the state(s) you file in. If you want details beyond that, send me a personal message.

    ---

    P.S. I'm not a tax guru. I've been forced to take some classes in personal and corporate tax accounting and retain that material to pass my professional exams and I've had yucky tax returns since I was a kid with a lawn mowing business.

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Quote Originally Posted by Pan Dah View Post
    I seriously doubt it's taxable in NJ, tho' a case could be made for taxing the amount that's greater than the taxes owed.

    In any case, the highest rate you're likely to be paying to NJ is less than 7%. So would you rather have 93% of something, or 100% of nothing?
    :-p Hey, lots of things are taxable in NJ. I look most gift horses in the mouth PanDah. Like PhaedrusZ, I'd rather have the tax credit!

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Yeesh, sorry. I just meant I'd rather not have it in my grubby little paws. This is why I don't post in Dollar Den much.

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    AudreyLeigh
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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    So, um, who gets these checks? Everyone? Or only those in certain tax brackets? And how much do you get? I must live in a cave....

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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    As I understand it, as long as you file for 2007, presumably on time, you get it.
    "Before I conceived you, I wanted you. Before you were born, I loved you. Before you were here an hour, I would die for you. This is the miracle of life." -- Maureen Hawkins

    "I just can't get over how much babies cry. I really had no idea what I was getting into. To tell you the truth, I thought it would be more like getting a cat." -- Anne Lamott

  12. #12
    AudreyLeigh
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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    I found a thing on money.com and it said they were looking at making this rebate different for next year. One of the options was having the rebate be equal to the amount paid to social security (about 6.2%) Wouldnt THAT be awesome?! Id be in heaven to get an $8,000 rebate.

  13. #13
    AudreyLeigh
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    Default Re: Are the rebate checks due in May considered taxable income for 2008?

    Sure. Next year please.

    "Another way is to have the rebate be a payroll tax rebate. The payroll tax - 6.2 percent of your wages - is what's taken out of everyone's paycheck to fund Social Security, no matter how low your annual income."

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